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. Super Group
Super Group continues to struggle. The main negative in the third quarter (3Q) of 2014 was narrowing margins. Sales faltered at similar rates as before, as expected, but a sharp gross profit margin contraction caused the earnings shortfall.
Its 3Q net profit of $10.5 million formed only 13 per cent of our full-year forecast, and net profit for its first nine minths of 2014 only 57 per cent. We do not see light at the end of the tunnel. We expect the share price to be weighed down by further earnings cuts; we cut our own EPS (earnings per share) by 23-26 per cent. Weak ASEAN currencies and cost pressures present a difficult environment for this former market darling.
Maintain REDUCE with target price lowered to 83 cents from $1.10
2. Global Testing
Global Testing announced favourable results with net profit after tax for 3Q14 rising 35.4 per cent year-on-year (YoY) to US$1.1 million. Net profit after tax for 9M14 surged 264.7 per cent YoY to US$2 million from US$550,000, making up 77 per cent of our full-year estimate, well in line.
Maintain BUY awith target price of 16.5 cents, backed by the ongoing turnaround of its main customer TSMC, its net cash position of 6 cents a share and continued share buybacks, and lower depreciation expenses.
3. Nam Cheong
Broker: OCBC Investment Research
Nam Cheong reported a strong set of results on Tuesday, with revenue rising 81 per cent YoY to RM618.6 million and net profit more than doubling to RM126.3 million in 3Q14. This brought 9M14 net profit to RM260.7 million, beating ours and the street's expectations. Bloomberg consensus for FY14F net profit was RM264 million while we were going for RM258 million. Its 9M14 gross profit of RM302 million met 82 per cent of our full year estimate.
Nam Cheong has seen a record year so far in terms of new orders, and the group continues to see demand for AHTS vessels and other OSVs in the shallow water region. In particular, the demand for small size AHTS vessel remains strong with fleet replacement programs.
With a change in analyst coverage and pending an analyst briefing later Tuesday, we maintain our BUY rating but put our fair value estimate of 55 cents under review