Investors’ Corner (Cogent Holdings, ComfortDelGro Corporation, Thai Beverage Public Company, Wilmar International)

Cogent Holdings
Price – $0.805
Target – $1.12

Cogent Holdings’ (Cogent) revenue for 2Q17 rose 3.6% in line with our forecast driven by improved profitability for the container depot operations as well as maiden contribution from Phase 2 of Port Klang Free Zone warehouse. The group declared a first-ever interim dividend of $0.0313 which we do not expect to be repeated next year mainly due to the unusually high quantum – 92% payout from 1H17 earnings per share – when compared against past year dividends. Cogent’s cash generating ability remains resilient with 2Q17 net cash from operating activities growing 24% y-o-y. While warehouse oversupply situation persists, we see higher earnings coming from the container repair, maintenance and washing JV as well as additional contribution from the Jurong Island Chemical Logistics Facility project when it becomes operational in FY19E. Maintain BUY. Phillip Securities (14 Aug)

ComfortDelGro Corporation
Price – $2.31
Target – $2.25

ComfortDelGro Corporation’s 1H17 core earnings missed on weakness across most segments. 2Q17 core earnings dropped 7% y-o-y with EBIT declining for all key segments except for public transport which reported flat growth. Taxi’s EBIT deteriorated from the 12% decline in 1Q17 to fall 17% in 2Q17 mainly due to the intense competition from the private-hire vehicles. The public transport is the only positive segment despite earnings being eroded by the weak UK bus business attributable to depreciating GBP as well as increased start-up costs for DTL3. Potential growth catalysts we foresee in the medium term include the commencement of the Seletar Bus Package in 1Q18, DTL3 to help the rail segment to break even in 2H18 as well as the tender results for the Thomson East Coast Line which could be announced in Sep-17. Maintain HOLD. Maybank Kim Eng (14 Aug)

Thai Beverage Public Company
Price – $0.93
Target – $1.09

Thai Beverage Public Company’s (ThaiBev) 9M17 revenue fell 6% y-o-y as a result of the continued effect of the mourning period. Nevertheless, we are seeing a less steep decline which lends support to our view that impact from the mourning period is softening, and as such expect stronger alcohol consumption recovery from FY18 onwards. While beer sales volume declined 8.7% in 3Q17, market share remained largely unchanged at around 40%. Impact of the excise tax on spirits should be minimal given ThaiBev’s market leadership and is usually able to pass though the additional costs to customers through higher average selling prices. Meanwhile, ThaiBev has entered into an agreement to acquire more than 240 KFC stores in Thailand which we believe is likely to be earnings accretive and fell in line with the group’s vision to diversify its non-alcohol revenue contribution. Maintain BUY. UOB-Kay Hian (14 Aug)

Wilmar International
Price – $3.42
Target – $3.43

Despite the recovering FFB production, Wilmar International’s (Wilmar) 2Q17 pre-tax profit for the tropical oils segment fell 68% because of the weaker margins in the merchandising and processing businesses. While international soybean prices were volatile in 2Q17, Wilmar managed to recover from its one-off losses in 2Q16. Meanwhile, 2Q remains a seasonally weak quarter for sugar milling leading to an increase in overall pre-tax losses for the sugar division in spite of the growing revenue. Although the upcoming IPO of the group’s China unit could possibly swing investor interest on the stock, we do not see a need to accumulate now due to the time frame for the potential IPO being 18 months and considering the volatility and our cautious outlook on crude palm oil and soybean prices. Maintain NEUTRAL. RHB Research (11 Aug)