[ET Net News Agency, 23 January 2018] Daiwa Research lifted its target price for SITC
International (01308) to HK$9.3 from HK$8.5, and maintained its "buy" rating.
The research house believes 2018 will continue to be a strong year for SITC post its
positive profit alert for 2017. Daiwa sees a slight increase in its ASP (1% YoY) and
raised its volume growth estimate to 10% YoY (previously: 8% YoY) on the company's upbeat
view.
It also raised its 2017 EBIT margin to 14% (previously: 12%) and expects it to continue
to expand in 2018 on improving operating efficiency. Daiwa sees volume improvement across
the board; even weaker routes such as Japan and Korea are likely to have recorded strong
revenue growth in 2017, which should continue in 2018.
Daiwa expects SITC to benefit from industry consolidation, which it expects to continue
in 2018 with the merger of Japan's big three shipping companies - MOL, NYK and K Line. It
revised up its 2017-19 EPS forecasts by 10-12% after taking into account the positive
profit alert and the increase in its earnings estimates after the recent discussion with
management. (KL)