NEPTUNE ORIENT LINES
Broker: DBS Global Research
Call: Buy
Target price: $1.08
Neptune Orient Lines was able to record significant cost savings - around US$223 million (S$308 million) - in the second quarter from better network planning, return of expensive charters and more targeted cargo selection.
With the expected return of nine more chartered-in vessels in this half, further cost cuts are expected to materialise. Minor profitability looks achievable.
Though freight rates, especially on the Asia-Europe lane, are still bouncing near multi-year lows, NOL's strategy to sacrifice market share and focus on restoring profitability seems to be slowly yielding fruit.
EZION HOLDINGS
Broker: Maybank Kim Eng
Call: Buy
Target price: $1.55
Ezion's issuance of five-year notes worth $120 million at a rate of 3.65 per cent is the lowest among bonds in small and mid- cap operations and maintenance firms in Singapore. Its continued access to debt capital markets at low cost reflects lenders' confidence in its business.
Ezion had US$345 million (S$477 million) cash in the first quarter of this year. The new funds, together with expected improvement in operating cash flows, will help strengthen its balance sheet and meet any near-term debt and capital expenditure obligations.
UNITED ENVIROTECH
Broker: OCBC
Call: Hold
Target price: $1.74
United Envirotech's first-quarter results showed revenue climbing 26 per cent year on year to $83.8 million.
Net profit plunged 85 per cent year on year, largely due to a one-off expense related to the offer by CKM (Cayman) Company of $6.5 million. Excluding this item, as well as the large one-off gain of $14.2 million in the first quarter of last year, it is estimated that core earnings would have come in around $9.8 million.
Nevertheless, as first-quarter revenue and core earnings only met 18 per cent and 17 per cent respectively of full-year estimates, OCBC deems these results to be just decent.
Key risk would be potential share placements to increase the free float.
UOB
Broker: CIMB
Call: Sell
Target price: $22.10
UOB's second-quarter core net profit of $762 million was disappointing, coming in at 7 per cent below street estimate,
while half-year earnings made up only 47 per cent of consensus full-year forecasts.
The miss was mainly due to a lack of trading income, slowing core income, rising costs and a jump in specific provisions.
Funding pressures remain as competition for consumer deposit is high. Higher funding costs would eat up any ability to price up yields.
WILMAR INTERNATIONAL
Broker: CIMB Research
Call: Hold
Target price: $3.40
Although Wilmar's first-half
core net profit made up only 36 per cent of consensus full-year forecasts, the results seem
to be in line as a stronger second half is expected, driven by positive sugar contributions and higher sales volumes.
Wilmar expects crush margins to remain positive for the rest of the year.
It also projects the consumer products segment to continue its strong performance.
However, it expects flattish refining margin due to higher palm oil output and demand in the second half.
The group also indicated that its plantations and palm oil mills will be affected by the lower crude palm oil price.
