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Ezion Holdings: Negatives largely priced in

According to Wood Mackenzie, global capital spending by exploration and production (E&P) companies will total US$450b in 2017, up 3% compared to 2016 after two years of steep declines. Still, E&P investment in 2017 is expected to remain 40% below the level in 2014, and we expect the operating environment to remain challenging for many companies. Longer term investors, however, may choose to look beyond this and pick up beaten-down stocks whose negatives have been mostly priced in. Looking ahead, we expect Ezion to report impairments in its upcoming FY16 results but these are non-cash items, and the stock’s current low valuation (0.4x book) has largely priced in the negatives. Though the operating environment may still be challenging for companies in the industry, we think confidence is on the up. Based on a conservative 0.55x FY17F book, we raise our fair value estimate for Ezion to S$0.54. Upgrade to BUY.

ComfortDelGro Stable outlook for 2017

■ Better Singapore bus margin and operating cash flow under the GCM.

■ Improving Singapore rail profit on the commencement of DTL stage III operations.

■ M&A activities to drive net profit growth of overseas bus businesses.

■ Competition pressure from Uber and Grab in the taxi business likely manageable.

■ Strong balance sheet; decent FY16-18F dividend yield of 3.9-4.7%.


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CapitaLand Commercial Trust

Catalysts In Place To Overcome Near-Term Headwinds

CCT has rebounded strongly by 5% since the beginning of the year. We believe stock has more legs with positive news flow from redevelopment of GSCP acting as a key catalyst. A potential stake sale in One George Street could also allow it to recycle capital and eliminate any funding concerns. Despite negative headwinds facing the office market in 2017 we believe it is relatively well positioned due to its quality assets and high portfolio occupancy. Maintain BUY with a SGD1.68 TP (8% upside). It remains our Top Pick among the office S-REITs.

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Duty Free International (DFIL SP)

3QFY17 Results: Rewards Galore; Christmas Comes Late

3QFY17 headline net profit jumped 32.9% yoy to RM22.3m from RM16.7m in 3QFY16. In line with our expectations, the group’s net cash continued to balloon to RM227.2m from RM178.2m in 2QFY17. DFI declared another interim dividend of 1.25 S cents together with a 2-for-5 bonus warrant issue, which surpassed our expectations. Maintain BUY with a slightly lower DCF-based target price of S$0.55. 


Best World International: Poised for the big leap

Best World (BW) is a direct-selling company that has built a credible track record. Focusing on the premium skin care, it is well established outside of Singapore, and thus, the investment merits are not fully appreciated. BW’s ability to succeed in highly competitive markets like Taiwan and
China is a testimony of management capabilities. Despite the share-price
rally (480% over the past one year), the stock remains undervalued vs regional peers. Fundamentals are underpinned by 27% EPS Cagr over
FY16-18CL and strong free cashflow and backed by ~40% net cash equity. We initiate coverage with BUY and S$2.50 target price.

LionelLim8.16Check out our compilation of Target Prices

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