Pacific Andes Holdings: Good set of 9-mth results
Summary: Despite the traditionally low season, Pacific Andes Holdings (PAH) saw a 20% YoY rise in 3Q net earnings to HK$31.1m. For the 9-month period, revenue rose 42.8% to HK$2984.2m, while net earnings jumped by a similar percentage to HK$161.6m. The strong results were due to stronger demand for fish in China and more importantly, from the higher contribution from its Fishing unit under listed China Fishery Group (CFG). In Jan this year, CFG signed its third and fourth Vehicle Operating Agreements (VOAs) and increased its supertrawlers fleet to 23 and harvest volume to about 270,000 tonnes in 2007, an almost doubling from 2006. As PAH's 9-mth results were in line with our expectation, we are retaining our FY07 earnings estimate of HK$350.3m. However, this close to the year-end and with the higher number of supertrawlers, we are rolling into FY08 estimates. Using the same valuation parameter of 8x and FY08 earnings, we are raising our fair value from S$1.08 to S$1.41. PAH stays as a BUY. (Carmen Lee, OCBC)
0722 GMT [Dow Jones] STOCK CALL: DBS raises Pacific Andes' (P11.SG) target price to S$1.20 (based on 10x 2008F PE) from S$1.01, keeps at Buy; expects strong quarter in 4Q as it is peak fishing season. Notes recent surge in China Fishery's (F95.SG) share price, says PAH's 28.8% stake in company alone would be worth about S$569 million, when marked to current market price, which "essentially means that the group's value is waiting to be unlocked." Revises net profit forecasts up by 11%, 8% in FY07, FY08 to S$312.9 million, S$398.0 million respectively. Trades up 10.6% at S$0.985 on heavy volume. (JEM)
