Brokers' Take
City Developments | Hold
Nov 13 close: S$9.53
Target price: S$9.47
DMG & Partners Research, Nov 13
WE expect it will take some time before City Developments' (CDL's) overseas residential projects start to contribute to earnings. In China, CDL is still awaiting the launch of Eling Residences and Suzhou HLCC, depending on market conditions. In Japan, CDL plans to develop luxurious high-end condominiums at the former residence of Seiko founder Kintaro Hattori's freehold land site in Tokyo.
CDL is trading at a 25 per cent discount to revised net asset value, which is below its historical mean. At this price level, we think valuations are undemanding. We believe the market has likely priced in too excessive a discount on its Singapore residential exposure, and not affording time for its overseas diversifications to bear fruit.
Biosensors Int'l | Hold
Nov 13 close: S$0.605
Target price: S$0.66
CIMB Research, Nov 12
Q2 2015's dismal earnings are the worst since commercialisation of its first drug-eluting stent (DES). While rivals in China saw DES revenue growth in China, Biosensors seemed to again struggle to see proportionate volume sales. Since the average selling price cut is in line with the trend observed across the industry and its average selling prices are relatively steady now, we conclude that its inability to move products to key hospital accounts is a worrying sign. Also, we argue that the dismal Japanese licensing revenue that used to provide the group with bumper margins will eventually be gone. We slash our FY 2015-17 earnings per share forecasts by 31-35 per cent and lower our sum of parts-based target price. We see no major re-rating catalysts in the face of continued sluggish earnings. We downgrade it from "add" to "hold".
United Envirotech | Accept Offer
Nov 13 close: S$1.605
Offer price: S$1.65
DBS Group Research, Nov 13
BASED on our upgraded 2015 earnings per share of 7 cents, the offer and subsequent placement price translates to 27 times 2015 forecast earnings, which is about +1 standard deviation of historical mean and higher than the sector average of 24 times 2015 earnings.
With support from one of China's largest state-owned enterprises, United Envirotech will grow bigger and faster, leveraging on Citic's network and influence. But this will take time. In the near term, the offer would dry up liquidity and lofty valuations are vulnerable to market volatility. Hence, we recommend investors to realise value now and revisit the stock after the offer or when earnings catch up with valuation.
Compiled by Cai Haoxiang
Disclaimer: All analyses, recommendations and other information herein are published for general information. Readers should not rely solely on the information published and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.
