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Riverstone Holdings (RSTON SP)

Expansion Plans On Track But Recovery Gradual

We visited Riverstone’s Taiping plant in Malaysia. Expansion plans seem to be on track where building construction for Phase 4 has started and is scheduled to complete in Jul 17. Meanwhile, three other phases are operating smoothly, with firm demand and utilisation at 95%. We expect 2017 performance to recover on a low base, but believe the turnaround will be gradual due to a change in product mix and the lack of pricing power amid a competitive operating environment. Maintain HOLD and target price of S$0.94. Entry price: S$0.80.


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Plantations sector: Demand would have to be robust next year

Thus far, palm oil prices have recorded strong gains YTD on declining production and tightening inventories post El Nino, in addition to a depreciating Ringgit. The consensus view expects CPO production to rebound next year, and at this juncture, weather conditions are forecasted to be supportive for harvesting. All considered, we are NEUTRAL on the plantations sector. As of Oct-16, OCBC Treasury Research and Strategy expects the seasonally lower palm oil production in Malaysia and Indonesia to support prices above MYR2,700/MT into early 2017, with a MYR2,900/MT target for 1Q17. But given signs of ample supplies and some uncertainty over demand, OCBC Treasury estimates that CPO price may correct to MYR2,650/MT for 4Q17. Within the sector, we have a hold rating on both Golden Agri Resources [Hold, S$0.37] and Wilmar International [Hold, S$3.18]


SG Residential Sector:  Severe dip in home prices unlikely

In 2017, we forecast for private residential prices to dip 3% - 7% and private residential rents to fall 5%-10%. We see significant scope for curb reversals going forward, particularly if housing prices accelerate to the downside or if the economic outlook deteriorates rapidly from here. In addition, the economic backdrop appears fairly benign for domestic home prices; we forecast Singapore GDP growth at 1.3% and 1.5% in 2016 and 2017, respectively, and note that the unemployment rate remains at a low 2.1% as at end 3Q16. That said, a physical oversupply situation is likely to persist in 2017, which will impact rental levels and vacancy rates. Rising interest rates, together with the impact of falling rentals, will likely pressure the rental carry for investment home owners and result in incremental selling in the secondary market. We maintain a NEUTRAL rating on the sector, and prefer large-cap developers with diversified business models across geographies and subasset classes, healthy balance sheets, and share prices that trade at a significant discount to their long-term fundamental valuations. Our top picks are CapitaLand [BUY, FV: S$3.68], City Developments [BUY, FV: S$9.89] and GLP [BUY, FV: S$2.37].


iFAST Corporation Ltd.

A One-Stop Investment Platform

 Launched FSMOne account for investors in Singapore to invest in multiple products via one account

 Bond Express platform allows bite-sized bond investments from S$5,000, available only to accredited investors

 Introduction of FSM MAPS, a robo-advisory portfolio

 Maintain “BUY” with unchanged target price of S$1.275


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LionelLim8.16Check out our compilation of Target Prices

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