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Maybank Kim Eng City Developments (CIT SP) Visit to Gramercy Park Maintain HOLD; Fine-tuning RNAV We fine-tune our estimates post-visit to the Gramercy Park. Our ASP is lowered to SGD2,600 psf (from SGD2,850), but sales brought forward to reflect its competitive pricing. This led to overall EPS cuts of <2% for FY16-18. Nonetheless, we raise our RNAV-based TP by 3% to SGD9.43 for higher market value of its 65% stake in Millennium & Copthorne (Not Rated) of 450pence per share (from 365pence). While stock valuations remain undemanding at 0.9x P/BV and 24% RNAV discount, clear stock catalysts remains limited. Maintain HOLD. |
UOB Kayhian Sembcorp Industries (SCI SP) Surely Sir, The Utilities Business Has Been Overly Discounted Our analysis of SCI’s implied valuation for its non-marine business finds that it is trading at a 20% discount below its long-term historical mean. Additionally, implied prices for both its businesses are either priced for distress, or at a sharp discount to regional peers. The market has overly discounted headwinds in the business and an opportunity exists to accumulate. We also update on a minor hiccup in its India operations and trim 2016 earnings by 1%. Maintain BUY with a lower target price of S$3.29. |
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OCBC Singapore Airlines: Headwinds just got stronger Weak yields to persist Maintain HOLD on lower FV Singapore Airlines’ (SIA) Aug 16 operating results saw passenger capacity growth outpaced passenger traffic growth across all its passenger airlines. Overall passenger load factor (PLF) for Aug 16 fell 5.2ppt YoY to 79.7% as capacity grew 3.6% while passenger traffic declined 2.9%. For the parent airline, passenger traffic posted a steep decline of 6.8% YoY on softer demand across all regions against a 0.3% decrease in capacity, resulting in 5.6ppt fall in PLF to 80.0%, the lowest for the month of Aug since 2012. In our view, SIA’s Aug 16 operating results showed indications of weakening demand amid intensifying competitive environment. Coupled with competition from the Gulf and Chinese carriers, we believe passenger yields will continue to be under pressure in the near to medium term. We also believe SIA has yet to register any potential negative impact from the rise of Zika virus cases in Singapore. Hence, as we adjust for weaker yields outlook, we cut our FY17F/18F EPS by 9.7%/12.7%, respectively. Maintain HOLD, as we decrease our FV from S$11.56 to S$10.80, based on 0.9x FY17F P/B (-0.75SD 9-year mean). |
OCBC Thai Beverage: SABECO has sought approval for stock listing As various media outlets have revealed, Thai Beverage has joined several major foreign brewers in a bid for a stake in Vietnam’s largest brewer SABECO (Saigon Beer, Alcohol, Beverage Corporation). In a recent update, SABECO has filed documents to seek approval from the Ministry of Industry and Trade to join the Vietnam Stock Index (VN-Index) as the government would want the market to determine the price of stakes in SABECO, while the deal is expected to be worth at least US$1.8b. Following its listing, the divestment of SABECO will be done in two tranches, whereby the government will auction 53.59% in the company this year and the remainder of the stake in 2017. Articles also suggest the government is looking for the highest bidder. All considered, on stiff competition and uncertainties, we prefer to wait out on this development and keep our assumptions unchanged. We maintain our HOLD rating and fair value estimate of S$1.01, while longer term investors may consider accumulating at current price levels.
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