Compiled by Jamie Lee, The Business Times
TRIYARDS HOLDINGS | HOLD
TARGET PRICE: $0.345
MARCH 15 CLOSE: $0.29
OCBC Investment Research, March 15
Triyards recently announced that it has won contracts worth US$20.64 million (S$29 million) for the fabrication of two passenger ferries. They were secured by Strategic Marine, a wholly owned subsidiary, from two ferry operators.
The group has been diversifying its order mix, but the stock is still trading at close to 0.3 times of its book value, as investors may be awaiting further clarity on the impact that Triyards may face from an Ezra default.
As there could be further potential impact beyond what we know and estimate, we lower our fair value estimate to $0.345 and downgrade our rating to hold, pending more clarity relating to Ezra.
YANGZIJIANG SHIPBUILDING | ADD
TARGET PRICE: $1.21
MARCH 15 CLOSE: $1.10
CIMB Research, March 14
Despite a stronger balance sheet and better profits, Yangzijiang is trading at a significant discount to Cosco Corp and Sembcorp Marine.
Pan Ocean Korea has recently ordered five 63,000 deadweight tonnage bulk carriers (US$146 million in total) from Yangzijiang, firming our view that orders should improve by 42 per cent year on year in 2017F.
Positive industry data indicators - higher Baltic Dry Index, stronger second-hand market and the narrowing orderbook to fleet ratio to 11 per cent - spur hopes of better order momentum.
Our target price is lifted to $1.21 accordingly. Higher order wins and margins are the key catalysts.
Jefferies Singapore, March 14
Singapore banks are in no man's land. We met with Hong Kong-based investors, who debated on the margin reflation hypothesis.
Believers expect that local currency rates will follow US money market rates with a lag, which in turn will be beneficial for bank margins. Historically, that has been the trend.
On the other hand, there are investors who concur with our view that with weak domestic private consumption, lower annual job growth than historical trend and still-high leverage, it is likely that domestic rates will stay low and uncorrelated to USD rates, amid ample SGD liquidity.
Further, with higher commodity costs, SGD depreciation stance against USD may be limited or else imported inflation will be amplified.
On balance, these investors hold the view that unless external growth permeates in Singapore, local rates will be capped.
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