Company news 25 Oct

There are few company news today.

Kim Eng on Rotary

Share price pull-back suggests good entry opportunity. We rate Rotary as one of the better proxies to the region and Singapore’s increasingrefinery/oil terminal capex cycle. We maintain our target price of S$1.79 based on aminimum ex-cash multiple of 17.6x 2007 PE (0.7x PEG). Valuation looks attractive asthe stock is trading at PE multiples of 13.8x and 11.5x for FY07-08 respectively.Reiterate BUY.

>> Rotary is one of the safe play on Oil & Gas, or more precisely Jurong Island. Accumulate on dip.

Technics Oil & Gas

Technics Oil & Gas yesterday said it now expects weaker revenue for the fiscalyear ended Sept 30 and that its earlier bullish forecast of a 10-15 per cent revenue growth cannot be achieved, due to further delays in its project work schedulesplanned for its yard operations. Hence, while the group will definitely be profitable for the fiscal second half, its financial performance during the period will not bebetter than that achieved for the fiscal first half, it said. But given continuing robust sector demand, the company said it maintains a positive outlook for fiscal 2008.

>> I am interested in the company on the basis that it involves in FPSO related projects. However, problem with project based company is they are affected by project delay and problem in securing new projects. I need to research into the company numbers first before decide on whether to buy into the company.

Kim Eng on Cosco

Cosco still a BUY

The significance of this order is that it is ahead of our previous assumption of the pace of order growth. Furthermore, Cosco clearly has capacity to utilise at its Dalian and Guangzhou shipyards, which differs from our previous assumption that further new buildingorders will mainly be the domain of its Zhoushan shipyard, where it is adding a massive amount of capacity and has the ability to expand that yard even further. Although we arenot changing our forward 3-year forecasts, we are upping our growth assumptions for FY10and beyond. This is therefore captured in our DCF valuation, where we are now adjustingour fair value upward target to S$8.10, from S$7.50. 3 year earnings CAGR stands at 43%p.a.

>> Just as we think it has run too fast and hit the road block, they charge forward again. However, I really not sure about the impact of shipping cycle and their business. Investor might exercise own judgement on whether the chase it up or buy on dip. Market seems to like big player, citing scale is key to growth.