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. Gallant Venture
Broker: OSK-DMG
Gallant Venture's land sales have been snowballing as the buzz surrounding Bintan grows. Our channel checks show new resorts are opening as scheduled and existing operator Banyan Tree has raised its bets on the island by introducing serviced apartments.
On 13 June, trade publication/portal TTG Asia reported that Phase 1 of Treasure Bay Bintan will open in Q4 2014 with 1,500 room keys. Meanwhile, the Sanchaya Bintan will start accepting reservations via third party hotel booking website Small Luxury Hotels Of The World from Aug 1.
Management expects to reach critical mass of 5,000 room keys by 2015, and may hold international events to showcase Bintan on the global stage.
Reiterate Buy with our target price unchanged at $0.57.
2. Venture Corp
Broker: Maybank Kim Eng
Three of Venture's customers are currently undergoing merger & acquisition (M&A) activity. Unlike previous M&A deals where order volumes to Venture dropped after its customers were acquired, we believe the latest winds of M&A change may be positive for Venture in two of the cases, and at worse, have a neutral impact on one of the cases.
One of Venture's customers, a US medical device maker, announced that it is acquiring its Irish-based competitor (also one of Venture's customers) for US$42.9 billion.
Oracle Systems is also buying MICROS Systems for US$5.3 billion, the biggest ever acquisition in the point-of-sales systems market. We believe both deals, announced last month, would have a positive implication for Venture.
In addition, Honeywell Scanning & Mobility completed the acquisition of handheld tracking device maker Intermec in Sep 2013. Since then, uncertainty has given way to greater certainty, and Venture now believes that the impact from Honeywell's integration of Intermec will not be as negative as feared. We now believe this will turn out to be revenue-neutral for Venture in FY2014 and revenue-positive starting from FY2015.
So far, customer volumes have tracked forecasts, setting Venture up well to deliver 12 per cent earnings per share growth in FY2014. For Q2 2014, we expect revenue to rise 6 per cent year-on-year and 5 per cent quarter-on-quarter to $622 million, and net profits to rise 27 per cent year-on-year and 24 per cent quarter-on-quarter to $38 million. Results will be announced on 8 Aug.
Maintain Buy with a target price of $8.64.
