Money Talk: UOL, Golden Agri, Swiber

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. UOL Group

Broker: OCBC Investment Research

UOL reported 3Q14 PATMI (profit after tax and minority interests) of $102.6 million, which increased 9.6 per cent YoY mostly due to higher share of profits from joint ventuJV and associates (UIC, SingLand, and the Archipelago and Thomson Three projects), partially offset by higher marketing expenses and pre-opening costs for Pan Pacific Hotel and Serviced Suites Tianjin.

We judge 3Q14 results to be marginally above expectations, driven by stronger-than-anticipated profit margins from the Esplanade. In Sep 2014, the group also launched Seventy St Patrick's with 59 per cent of total units sold as at end 3Q14, and we understand the Upper Paya Lebar condominium project will likely be launched in 1Q15.

Maintain BUY with fair value estimate raised to $7.18 from $6.95.

2. Golden Agri Resources

Broker: OSK-DMG

Golden Agri's performance deteriorated further with core earnings falling by 46.7 per cent quarter-to-quarter (QoQ- due to weakness across all operating segments. Lower palm oil prices in the quarter, poorer downstream margins and a still-lossmaking oilseed segment resulted in the earnings weakness. There was also an increase in inventory during the quarter by about 100,000 tonnes, which carried an unrealised profit of some US$12million. Core earnings for the first nine months only made up 55 per cent of our full-year forecast.

We slash our earnings forecast for FY14 to US$198 million from US$319 million previously, and also cut our FY15 forecast earnings to US$323 million vs US$369 million previously.

Downgrade to NEUTRAL from buy, with target price reduced to 50 cents from 57 cents.

3. Swiber Holdings

Broker: OCBC Investment Research

Swiber reported a very weak set of results. Revenue fell 60.9 per cent year-on-year (YoY) to US$107.3 million while gross profit plunged 97.8 per cent to US$847,000 in the third quarter of this year, such that gross profit for the first nine months of the year (9M14) accounted for only 38 per cent of our full year estimate.

The group saw a net loss of US$27.5 million in the quarter, bringing 9M14 core net loss to about US$62 million. Gross margin was only 0.8 per cent in the quarter as the group executed fewer projects, but still had to incur its high fixed costs. Net gearing also rose to 1.7x in 3Q14 vs 1x in 3Q13.

The stock is cheap, but for good reasons: Likely core net losses in FY14 and FY15, slow order flows amidst a competitive industry, accounts receivables that remain high, and a steadily rising net gearing.

Downgrade to SELL with fair value reduced to 34 cents from 49 cents.

Compiled by Ann Williams

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