SINGAPORE - Stay up to date on market chatter with our picks of the latest broker research reports, compiled by The Straits Times Money Desk.
1. Goodpack
Broker: CIMB
We believe that KKR's offer to buy Goodpack for $1.4 billion is fair, although investors may have been hoping for a higher offer price given that: 1) its closest listed competitor, Brambles, trades at a higher price/earnings multiple, and 2) the offer price only represents a 7 per cent premium over the prior closing price.
However, we think that investors have already largely priced in a takeover scenario. If the deal fails to materialise, we expect the stock to trace back to the $1.90-2.00 levels it was trading at prior to news of a potential takeover offer.
Due to limited upside to the offer price, we downgrade the stock to Hold from Add. Our target price is unchanged at $2.51.
2. Technics Oil & Gas
Broker: OSK-DMG
Technics Oil and Gas has been awarded contracts worth a total of $7.4 million through its subsidiaries. These contracts, which consist of supply of booster gas compressor package for a wellhead platform for Vietnam and the construction of steel structures, were secured within 2 weeks of a $166 million letter of award for setting up a gas processing facility in South Asia.
Until the compressor-leasing business reaches critical mass and/or margins for the engineering, procurement and construction contracting (EPCC) and contract engineering segments recover, the risks for Technics Oil and Gas remain firmly on the downside.
Maintain Sell.
3. Yoma Strategic Holdings
Broker: OCBC
On Wednesday morning, Yoma reported (an increase in) its shareholdings in Digicel Asian Holdings ("the Digicel JV"), which is involved in telecommunications infrastructure projects in Myanmar.
Under the announced structure, YSH Finance (80 per cent-owned by Yoma and 20 per cent-owned by FMI group) will hold 25 per cent of the Digicel JV. The JV plans to roll out telecommunications towers across Myanmar as the country aims to rapidly increase mobile phone penetration after the award of two telco licenses last year.
We note that the JV has already clinched a contract to provide telecommunication towers to Ooredoo (which won one of the telco licenses) and also intends to offer similar services to other telco operators in Myanmar.
Maintain Buy on Yoma with an unchanged fair value estimate of $0.87.
