Stay up to date on market chatter with our picks of the latest broker research, compiled by The Straits Times Money Desk.
1. Noble Group
Noble has entered into a sale agreement with Cofco, China's largest grain trader, to dispose of 51 per cent of its agribusiness (Noble Agri) for an interim payment of US$1.5 billion. Financially, the positives for Noble include a lower gearing, interest savings and an improved earnings profile as Noble Agri's losses can now be shared.
However, at current valuations of 10 per cent above international peers, we believe that such positives have been priced in. Although upside could come from a sector re-rating or bumper payout, we struggle to find strength in a slow coal market. We also expect the bulk of the proceeds to be used for paring down debt.
We downgrade Noble to Reduce from Hold, with a higher target price of $1.12 from $1.00 previously.
Biosensors International Group (BIG) announced on Wednesday evening that it had struck a deal with Terumo Corporation to extend its licensing agreement until Dec 2016. The previous licensing agreement was supposed to expire in Dec 2014. This is the second time in which this licensing agreement has been extended.
Given that Terumo is planning to launch its next-generation Ultimaster in Jun 2014, we believe it is highly probable that this could be the last licensing extension with BIG for this current agreement.
Meanwhile, BIG also said that it is expanding its existing sales collaboration with Terumo in Japan in a bid to increase its market share amid strong competitive pressures. We maintain our sell rating on BIG with a fair value estimate of $0.77.
3. Singapore Land
Silchester International Investors, the second largest shareholder of SingLand, trimmed its stake from 8.16 per cent to 4.95 per cent after offloading 13.25m SingLand shares on Wednesday at $9.50 per share.
With its move, the free float of SingLand has increased from 11 per cent to 19 per cent. UIC's offer is now doomed to fail with the increased free float, unless it raises its offer.
Silchester had earlier highlighted that it deemed UIC's offer, at a 33 per cent discount to net assets, too low and that it intended to sell down its stake to below 5 per cent to protect its clients' interests in the absence of a higher offer from UIC.
With the threat of a potential delisting removed and the price discovery process facilitated by UIC's general offer, we think SingLand's share price will find good support at the current levels even if the offer lapses.
We continue to advocate a trading buy on SingLand. Our target price of $10.80 is premised on a 25 per cent discount to RNAV.