SINGAPORE - Stay up to date on market chatter with our picks of the latest broker research reports, compiled by The Straits Times Money Desk.
In line with expectations, ComfortDelGro delivered Q2 profit of $75.7 million (up 9.9 per cent year-on-year) on $1.02 billion in revenue (up 11.9 per cent year-on-year).
ComfortDelGro experienced broad-based growth but its British bus business was the main growth driver; we expect a similar stance going forward.
Given that short term price optimism has pushed the price near our target price of $2.60, we believe it is time to take profit.
2. Kim Heng Offshore & Marine
Kim Heng reported a 2.8 per cent year-on-year rise in revenue to $20.1 million in Q2, but delays in the arrival of drilling rigs and offshore support vessels from customers meant that the group undertook a higher proportion of lower margin projects in the quarter, leading to a drop in gross profit margin from 45.3 per cent in Q2 last year to 30.2 per cent in Q2 this year.
This led to a 66 per cent year-on-year fall in net profit to $1.6 million in Q2, such that H1 net profit met 30 per cent of our full year estimate. Management highlighted the lumpy nature of its earnings, and remains optimistic of its 2H14 financial performance, barring unforeseen circumstances.
As at July this year, the group has secured work worth about $86 million, of which $40 million is attributable to a recently signed master service agreement.
We lower our fair value estimate from $0.34 to $0.31. Maintain Buy.