Compiled by Stephanie Luo
MERMAID MARITIME | HOLD
TARGET PRICE: $0.14
AUG 17 CLOSE: $0.143
DBS Group Research, Aug 17
Mermaid's order book declined by some 34 per cent quarter-on-quarter to US$98.6 million (S$134.5 million) for Q2 2017, setting a new low.
While continued deferment of Inspection, Repair and Maintenance work by oil majors is one reason, we cannot discount the effects of stronger competition from increased tonnage in the region. One of the key Indonesian-flagged chartered-in vessels, Nusantara, was returned in light of weak market conditions.
Meanwhile, the Seadrill restructuring process remains an overhang on the stock, as key associate Asia Offshore Drilling - Seadrill holds a stake of about 66 per cent - could potentially see impairments and/or change of majority shareholder if the restructuring plan falls through.
GUOCOLAND | BUY
TARGET PRICE: $2.75
AUG 17 CLOSE: $2.09
Maybank Kim Eng Research, Aug 16
We believe that its small free float, lower trading liquidity and limited analyst coverage are technical reasons for the underperformance and steeper valuation discount when compared to its larger peers.
Fundamentally, we see a company with improving financials and attractive valuations.
The stock trades at a 44 per cent revalued net asset valuation discount and 0.67x price/book value ratio.
Key risks could arise from a sharp fall in property prices in Singapore and China.
With Singapore accounting for almost 70 per cent of its valuation, we believe GuocoLand is a good proxy to an impending rebound in property prices.
OLD CHANG KEE LTD | BUY
TARGET PRICE: $0.98
AUG 17 CLOSE: $0.76
Phillip Securities Research (Singapore), Aug 16
Puff products remained the major contributor to its revenue, accounting for about 33 per cent of the group's Q2 2017 revenue.
Product innovations drove higher sales from mature stores.
We expect five new stores, bringing Old Chang Kee to a total of 92 outlets by end of FY18.
The newly-reconstructed factory at 2, Woodlands Terrace, received its temporary occupation permit mid last month and is being equipped with advanced facilities.
New stores opening and product innovations will continue to drive topline growth.
We revised our FY18 earnings lower by about 19 per cent to account for higher raw material costs. Nonetheless, we are optimistic that the new factory will yield manufacturing efficiencies and new product offerings.
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