Summary: As GRP Ltd operates in a fairly mature industry, outlook for the next two financial years is steady with recurring income from its stable group of customers. We believe the company should not have any problems maintaining a dividend payout of at least 1.5 cents for FY08 and FY09, which translates into decent yields of 6.3% and 6.6% for FY08 and FY09, respectively. Given the recent market weakness, we believe there are good buying opportunities for oil and gas services-related companies. We remain positive of the operating environment for this industry, especially with high oil prices. Using 9x FY08F PER, our fair value remains at S$0.25. Coupled with an expected 6.3% dividend yield, we reiterate our BUY rating. (Serene Lim)
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NEWS HEADLINES
- October's inflation rate surged unexpectedly to 3.6%, a 16-year high for Singapore.
- SembMarine appointed Lim Joke Mui, group CFO of SembCorp Industries, as a non-executive director in an attempt to strengthen its corporate governance.
- HG Metal reported a 31.6% YoY rise in FY07 net profit to a record $18.1m, driven by higher steel prices and strong demand. It is proposing a 1-for-3 bonus share issue.
- CosmoSteel Hldgs and Federal International announced the formation of a 50-50 JV investment vehicle, KVA Energy to target energy projects in the Asia Pacific region.
- Sihuan Pharmaceutical Hldgs has bought the rights to a Chinese antithrombotic drug for RMB3.5m, with clinical trials expected to commence in the later half of 2008.
- China New Town Dev is to take an 80% stake in a 11 sq km township project in Changchun, China. 20% will be held by the Changchun Auto Industry Development Zone Administrative Committee.
- Pan Hong Property Group announced plans for 2 property launches in Jiangxi Province next year. It also acquired about 191k sqm of land in Fuzhou City for RMB210m in order to develop high-end residential and commercial properties.
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