WHAT THE BROKER SAID
About a year ago DBS Vickers Securities set a one-year price target of $31.60 on Orient Overseas International, an upside of more than 32 per cent on the price of $23.85.
Last August OOIL, which is 68 per cent held by the family of former chief executive Tung Chee-hwa and derives almost all profit from shipping company Orient Overseas Container Line, posted a 238 per cent year-on-year growth in its first-half net to US$268 million, way ahead of market forecasts.
DBS Vickers expected the upward revision of forecasts for full-year earnings to cause the share price to jump. With the start of the busy season in shipping and peak surcharges, stronger cargo volume and freight rates were expected in the second half. The broker raised its profit forecast for OOIL by 15 per cent to US$531 million in 2004. Valuation of the company was still attractive at 3.3 times price/earnings forecasts for 2004 and a 7.6 per cent yield. DBS Vickers reiterated its 'buy' recommendation.
In March OOIL said it more than doubled net earnings last year to US$670.44 million. This month the company said earnings in the first half of the year rose a comparable 15 per cent to US$308.8 million.
The counter closed on Friday at $32.85.