STOCKS NEWS SINGAPORE-Index falls, Olam extends gain
Singapore shares fell by midday after the previous day's rally, but commodities firm Olam International Ltd bucked the weak market, extending its gain since launching its first share buyback.
The Straits Times Index was down 0.6 percent at 2,770.35 points, while MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.7 percent. The Singapore bourse rose 1.8 percent on Monday.
Some of the biggest decliners on the index were Global Logistic Properties, which fell more than 3 percent, and Sembcorp Marine, losing 1.6 percent.
Olam shares rose as much as 2.5 percent, bringing its total gain since its share buyback announcement late on Friday last week to nearly 12 percent. Analysts said the move signals the management's confidence in the firm's long-term prospects.
But even after the rally, Olam stock was still down about 15 percent so far this year, underperforming the nearly 5 percent gain in the broader index.
Citigroup said Olam's price-earnings ratio valuation for equity is at similar lows to those seen during the global financial crisis, as the commodity sector was hit and it will take longer for growth to come from some of its investments.
Olam has a lower gearing in this cycle, with adjusted net gearing of 0.4 times, leaving it room to fund further debt or equity buybacks as it had raised S$740 million ($576.9 million) in new equity last year, Citi said.
1135 (0335 GMT) (Reporting by Eveline Danubrata in Singapore; email@example.com)
11:18 STOCKS NEWS SINGAPORE-Maybank Kim Eng raises Ezion target
Maybank Kim Eng raised its target price on Ezion Holdings Ltd to S$1.38 from S$1.35, while keeping its 'buy' rating, after the oil and gas services firm won an $86.3 million service rig contract.
Ezion shares were down 1.9 percent at S$0.795, underperforming the 0.8 percent drop in the FT ST Small cap Index. The stock has risen about 20 percent so far this year.
Maybank raised its net profit forecasts for Ezion's 2013-2014 fiscal years by about 5 percent to factor in the firm's new contract, believed to be from Mexico's Pemex. The broker estimated the project would add $7 million per annum to Ezion's net profit over the 2013-2016 fiscal years.
Ezion is also gunning for a third Australian liquefied natural gas marine logistics contract and the tender results are likely to be known by next month, Maybank said.
While Ezion's gearing is set to rise to fulfill the estimated capital expenditure of $450 million this year, Maybank said the strain on the balance sheet should ease as operating cash flows increase on the deployment of its units.
The broker said Ezion was the cheapest offshore and marine stock under its coverage, while offering one of the strongest earnings growth potential at a 33 percent compound annual growth rate over the next three years.
For a related story, click [link.reuters.com/fuj68s]
1058 (0258 GMT)
(Reporting by Leonard How in Singapore; firstname.lastname@example.org) ($1 = 1.2827 Singapore dollars)
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