Stocks In Focus MY (Eco World, Paramount, Vitrox) – 20/03/15
20 March 2015
Bright Outlook For Eco World As Sales To Hit RM3b: CIMB Research
CIMB Equities Research said Eco World Development’s 1Q15 net profit was within expectations and made up 8 percent of its full year forecast. While new sales only totalled RM440 million this quarter, it is expected to acheive the full-year target of RM3 billion as sales recover in future quarters due to new launches.
The research firm said that the group will be launching four new projects this year – Eco Terrace, Eco Tropics, Eco Business Park 3 and Eco Sanctuary and it completed the acquisition of landbank from Eco World in February for RM3.8 billion.
The research house mentioned that the sole remaining part of the restructuring exercise at present was the 20 percent private placement, which should be completed in 2Q15 and the firm’s management will be able to wholly concentrate on operational issues and lead the company to greater heights now that the exercise is almost complete at last.
Significance: CIMB Equities Research retains its EPS forecasts and makes an ‘Add’ recommendation on the stock, with a target price of RM2.60. The company remains one of its top picks in the property sector, with the completion of the restructuring exercise, robust sales in upcoming quarters and landbanking as the main catalysts.
Paramount Unveils Game Plan
Property and education group Paramount Corporation is targeting an annual double-digit growth over the next five years. It has four ongoing property development projects with an average of approximately five years of construction left to go. The company hopes to launch five more projects by 2016, including another university college campus planned in Batu Kawan, Penang, which is scheduled to commence operations in 2019. It hopes to establish recurring income streams through these investment properties.
The company said that its main growth strategies included expanding and replenishing its landbank, currently around 364.2 hectare, as well as maintaining a property development plan consisting of 30 percent landed townships and 70 percent mixed developments. It said another growth strategy was to offer innovative product development with a lifestyle theme, such as its integrated development Paramount Utropolis located in Glenmarie, Shah Alam.
With regard to its education arm, the group shared that it would be organically growing its student numbers through focused marketing and distribution, as well as creating and expanding its industry relevant programmes. It also mentioned that it would be initiating an intense enrolment exercise at its second university campus integrated mixed development in Batu Kawan over the next four years and would be capitalizing on its reputation to launch the successful Sri KDU brand in new markets, with one in Klang being an identified project in the pipeline.
Significance: By concentrating on building quality and top-notch education products, the company will be able to increase its pricing over time. With its unique ability to combine both the property and education sectors and derive synergy from them and its RM9.1 billion gross development value, it expects to maintain its formidable growth over the next five years despite its move into the more affordable segment and the anticipated goods and services tax in April.
Vitrox In For Double-Digit Growth
Vitrox Corporation, an automated machine vision inspection system equipment and service provider, is expected to chalk up double-digit growth in sales this year, underpinned by healthy industry outlook and opportune capacity expansion. It is also expected that the appreciation of the US dollar will benefit the Penang-based company.
According to Kenanga Research, healthy global semiconductor sales forecasts bode well for the company. With an anticipated 15 percent growth in worldwide equipment sales in 2015 due to the rocketing demand for smartphones, big data and the Internet, it is predicted that there will be an increase in the volume and complexity of semiconductor packages and printed circuit board assembly, which means more inspections will be required to ensure good quality and high productivity. The research house noted that the company is poised to capitalize on this promising situation.
The research firm said that the group foresaw that revenue will hit the range of RM32 million to RM36 million on the back of a healthy order backlog of RM18 million. Of late, the group has acquired land at Batu Kawan Industrial Park for RM34.2 million, which will be developed as a new facility temporarily called ViTrox Campus 2.0. The construction of Phase 1 will begin in early 2H15 and is targeted for completion by early 2017.
Significance: Vitrox has a zero-gearing position with strong net cash of RM56 million at end 2014 and the research house believe it could offer up to RM0.051 and RM0.058 dividend per share for 2015 and 2016 respectively. At the moment, Kenanga Research has a ‘Trading Buy’ call on the company with a fair value of RM3.84 per share.
20 March 2015
Bright Outlook For Eco World As Sales To Hit RM3b: CIMB Research
CIMB Equities Research said Eco World Development’s 1Q15 net profit was within expectations and made up 8 percent of its full year forecast. While new sales only totalled RM440 million this quarter, it is expected to acheive the full-year target of RM3 billion as sales recover in future quarters due to new launches.
The research firm said that the group will be launching four new projects this year – Eco Terrace, Eco Tropics, Eco Business Park 3 and Eco Sanctuary and it completed the acquisition of landbank from Eco World in February for RM3.8 billion.
The research house mentioned that the sole remaining part of the restructuring exercise at present was the 20 percent private placement, which should be completed in 2Q15 and the firm’s management will be able to wholly concentrate on operational issues and lead the company to greater heights now that the exercise is almost complete at last.
Significance: CIMB Equities Research retains its EPS forecasts and makes an ‘Add’ recommendation on the stock, with a target price of RM2.60. The company remains one of its top picks in the property sector, with the completion of the restructuring exercise, robust sales in upcoming quarters and landbanking as the main catalysts.
Paramount Unveils Game Plan
Property and education group Paramount Corporation is targeting an annual double-digit growth over the next five years. It has four ongoing property development projects with an average of approximately five years of construction left to go. The company hopes to launch five more projects by 2016, including another university college campus planned in Batu Kawan, Penang, which is scheduled to commence operations in 2019. It hopes to establish recurring income streams through these investment properties.
The company said that its main growth strategies included expanding and replenishing its landbank, currently around 364.2 hectare, as well as maintaining a property development plan consisting of 30 percent landed townships and 70 percent mixed developments. It said another growth strategy was to offer innovative product development with a lifestyle theme, such as its integrated development Paramount Utropolis located in Glenmarie, Shah Alam.
With regard to its education arm, the group shared that it would be organically growing its student numbers through focused marketing and distribution, as well as creating and expanding its industry relevant programmes. It also mentioned that it would be initiating an intense enrolment exercise at its second university campus integrated mixed development in Batu Kawan over the next four years and would be capitalizing on its reputation to launch the successful Sri KDU brand in new markets, with one in Klang being an identified project in the pipeline.
Significance: By concentrating on building quality and top-notch education products, the company will be able to increase its pricing over time. With its unique ability to combine both the property and education sectors and derive synergy from them and its RM9.1 billion gross development value, it expects to maintain its formidable growth over the next five years despite its move into the more affordable segment and the anticipated goods and services tax in April.
Vitrox In For Double-Digit Growth
Vitrox Corporation, an automated machine vision inspection system equipment and service provider, is expected to chalk up double-digit growth in sales this year, underpinned by healthy industry outlook and opportune capacity expansion. It is also expected that the appreciation of the US dollar will benefit the Penang-based company.
According to Kenanga Research, healthy global semiconductor sales forecasts bode well for the company. With an anticipated 15 percent growth in worldwide equipment sales in 2015 due to the rocketing demand for smartphones, big data and the Internet, it is predicted that there will be an increase in the volume and complexity of semiconductor packages and printed circuit board assembly, which means more inspections will be required to ensure good quality and high productivity. The research house noted that the company is poised to capitalize on this promising situation.
The research firm said that the group foresaw that revenue will hit the range of RM32 million to RM36 million on the back of a healthy order backlog of RM18 million. Of late, the group has acquired land at Batu Kawan Industrial Park for RM34.2 million, which will be developed as a new facility temporarily called ViTrox Campus 2.0. The construction of Phase 1 will begin in early 2H15 and is targeted for completion by early 2017.
Significance: Vitrox has a zero-gearing position with strong net cash of RM56 million at end 2014 and the research house believe it could offer up to RM0.051 and RM0.058 dividend per share for 2015 and 2016 respectively. At the moment, Kenanga Research has a ‘Trading Buy’ call on the company with a fair value of RM3.84 per share.
