Business

Brokers' take

Compiled by Anita Gabriel

CNMC GOLDMINE HOLDINGS | ACCUMULATE

TARGET PRICE: $0.30

FEB 27 CLOSE: $0.26

Phillip Capital, Feb 27

Revenue was in line with our expectation.

Net profit outperformed our expectation, due mainly to the unexpected downward adjustment of compensation for employees and key management.

Results from the trial operation of Carbon-In-Leach (CIL) met expectation.

Production at CIL plant is expected to kick-start in Q218. With the help of the plant and available high-grade ore stockpiled, it is expected to see a significant improvement of output volume this year.

Monetisation of other minerals (silver, lead and zinc) at Sokor will resume.

The company plans to build the flotation facility on site after the CIL production stabilises.

The budget, capacity and construction schedule for this project will be comparable to those for CIL plant.

In Q118, the company will continue to conduct diamond drilling under Sokor and KelGold project; exploration in Pulai concession will resume.

The negatives - impact of low-grade ore lasted during full FY17 amid ascending gold price. Total sales volume of gold dropped by 10.4 per cent year-on-year to 3,619.3 oz in Q417. Accordingly, the FY17 sales volume of gold arrived at 14.8k oz (down 45.9 per cent year-on-year).

The average realised selling price (ASP) grew mildly to US$1,293/oz in FY17 (FY16: US$1,265/oz).

In FY18, the primary catalyst that we look forward to is the significant turnaround of gold output, stemming from the replenishment of high-grade ore and higher gold recovery.

Another positive factor is the resumption of the uptrend in gold price.

Meanwhile, we expect more capex from flotation facility construction and additional operating expenses from a planned dual primary listing in Hong Kong.


RAFFLES MEDICAL GROUP | FULLY VALUED

TARGET PRICE: $1.00

FEB 27 CLOSE: $1.16

DBS Group Research, Feb 27

The company's FY17 net profit grew marginally by 0.8 per cent y-o-y. The slower growth was in line with muted revenue growth of 0.8 per cent.

While we see long-term growth potential of Raffles Medical's expansion plans into China, earnings could decline during its gestation period.

Hence, we adopt a more cautious and conservative view in the near- to medium-term, despite the previous share price de-rating.

While healthcare is relatively resilient, private healthcare could be impacted by a slowdown in the economy as elective procedures can be deferred, or patients may choose public hospitals as a lower-cost alternative.

Our target price of $1.00 implies 26x/30x FY18F/FY19F price earnings (PE). This is based on sum of parts, pegging FY18F/FY19F earnings to historical average PE (since 2005) of 22x plus $0.20 per share for its China hospitals.

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