|
CIMB Singapore Strategy Feedback from marketing ■ “Any good news in Singapore?” was a common question during our recent marketing trip to Singapore and Malaysia. ■ No major pushback on our defensive high-yield names, with Venture Corp, ST Engineering and Singtel as our three must-own top picks. ■ We replaced Best World with Thai Bev in our 10% hit list, given its recent surge. ■ Maintain Overweight on REITS and property, and identified two other themes to play the Singapore market: 1) ASEAN domestic consumption, and 2) new technology.
|
MayBank Kim Eng Singapore Post Ltd (SPOST SP) Gain after Pain; U/G to BUY Issues on the mend, Board revamped; TP raised 37% Three of our key concerns on the stock earlier are gradually being addressed: i) corporate governance issues appear to be fading with a partial revamp of the Board of Directors and SingPost taking on board various recommendations of the recently concluded audits; ii) significantly reduced risk of more big-ticket (and likely ROIC dilutive) acquisitions that were pursued by the previous leadership with the focus shifting to integration and monetization; iii) the stock has fallen c.13% YTD and growth expectations have been reset to more reasonable levels with consensus forecasts cut by >10%. We raise our DCF-based TP 37% to SGD1.77 from a drop in our WACC estimate from 11.3% to 8.7% to reflect much lower new acquisition and execution risk, and upward revisions to our medium-term profit growth outlook. Upgrade to BUY from SELL.
|
|
OCBC SG Residential Property: Price outlook still cloudy Limited developer launches Animal spirits from TDSR tweaks limited Physical oversupply remains key headwind over 2016-17 Primary developer sales in August dipped 56.6% MoM to 473 units mostly due to the effect of the Lunar Seventh month, and were also 7.8% lower than the corresponding period last year. Given that the market remains in a state of physical over-supply over 2016-17, we continue to forecast for private home prices to grind 5-15% lower over this period and also expect pressures on rental rates to persist. The authorities have been careful to clarify that the recent tweaks of refinancing rules under the Total Debt Servicing Ratio (TDSR) rules should not be construed as an easing of property curbs, and in fact have stated that they do not expect to ease anytime soon. As a result, buyer sentiments have been managed by the authorities’ clear messaging and any uplift in animal spirits has been limited so far. Maintain NEUTRAL on the property sector; we continue to prefer diversified blue chips with healthy balance sheets and strong business models. Our top picks are CapitaLand [BUY; S$3.68], City Dev [BUY; S$9.89] and GLP [BUY; S$2.37].
|
UOB KayHian ComfortDelGro Corporation (CD SP) (CD SP/BUY/S$2.79/Target: S$3.11) The past months have been transformational for Singapore’s land transport sector, ranging from SMRT’s transition to NRFF, the bus contracting model and disruption from private car hire operators. We analyse the potential implications of each of these events and believe that current share price weakness is unwarranted and a buying opportunity. Additionally, we have revised our valuation methodology from DCF to PE-based, reflecting the uncertainty and ongoing changes in the sector. Maintain BUY with PE-based target price of S$3.11 (previously S$3.22). |
