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CapitaLand (CAPL SP)

Stellar Year, So Far

Maintain BUY; TP raised to SGD4.06

9M16 EPS met, at 79% of our FY16E. We expect strong sales recognition to continue as unbilled home sales in China remain high at CNY14b. Recognition of 40% of these in 4Q16 provides sales visibility of SGD1.1b. We raise our TP by 3% to SGD4.06 to incorporate the latest market values and TPs of its listed REITs. Our TP implies a 21% discount to RNAV. Maintain BUY. CAPL is our preferred exposure among Singapore property developers. Key risks to our positive view: overpaying for land and a sharp fall in property prices in China and Singapore.


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First Resources Ltd

Early signs of recovery in output from El Nino

■ 9M16 core earnings were above our forecast but below consensus estimates

■ FFB output fell 11%/14% yoy in 3Q16 /9M16 due to El Nino-induced drought.

■ Higher CPO price and net drawdown of inventory lifted plantation earnings in 3Q16. ■ Refinery and processing profit improved qoq due to higher volumes and margins. ■ Maintain Add with higher target price of S$2.32 (13x FY18 P/E) due to rollover effect.


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>Market: Trump is 45th President

 Trump is the next President

 Stunning upset

 Reversal of sharp losses

It seemed like deja vu all over again when the widely expected Clinton win failed to materialise. As seen during Brexit, the stunning outcome took the market by surprise, but the reaction was swift and short-lived.  The S&P500 swung from negative to positive and closed up 1.1%. In Singapore, the STI moved from down 59 points to down 30 points by the close of trading. Yesterday, Trump spoke about re-uniting the country, rebuilding the inner cities, looking for common ground and also building on foreign partnerships and relationships. The overhang has been cleared, but we believe that risk aversion is likely to remain. We viewed any sharp correction as a tactical buying opportunity. We advocate a diversified portfolio, with focus on safe haven and good yielding stocks. We continue to like AREIT, CapitaLand, CityDev, Frasers Centrepoint Trust, Keppel DC REIT, OUE, Sheng Siong, UOL, Venture and Wing Tai



Yangzijiang Shipbuilding

Value emerging

Steep discount to book unwaranted.

While the operating environment for shipbuilding remains challenging, Yangzijiang Shipbuilding (Yangzijiang) is well-positioned to emerge stronger from this downturn with its wide economic moat. Its net cash of 54 Scts per share (includes Held-to-Maturity investments), representing 43% of NTA, bodes well for M&A opportunities. Valuation is undemanding at 0.6x P/B, which represents a 33% discount to the Global Financial Crisis trough of 0.9x P/B. Our SOP-based TP of S$0.95 translates to 0.8x P/B, against 7.5% ROE and 4-5% yield. Reiterate BUY.


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Fraser and Neave

Dairies saved the day, but cloudy prospects


 FY16 Revenue/EBITDA missed our forecast by 0.6%/13.4%

 Double whammy from unfavourable macro backdrop and rising costs pressure

 New markets are still in nascent stage and no concrete acquisition plan yet

 FY16 dividend of 4.5 Cents per share, 10% lower than FY15’s


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Check out our compilation of Target Prices

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