Singapore Press Holdings: Underwhelming start to the year
SPH’s 1QFY17 PATMI declined 43.8% to S$45.7m mostly due to a S$15.9m charge arising from the media business review and impairment of an associate, and a decline of S$12.6m in profits from the media business. We also saw a S$1.8m net loss from investments over the quarter due to fair value losses on forward hedges for portfolio investments, versus a net gain of S$10.3m in the same quarter last year. While this quarter’s earnings were fairly weak, they came in mostly within our expectations and 1QFY17 PATMI now constitutes 20.0% of our full year forecast. On the brighter side, SPH’s property segment continues to show resilience with revenue contributions up 1.3% YoY to S$60.5m. Given the uncertain economic outlook and the continuing disruption of the media industry, we expect conditions to remain challenging for the group’s media business ahead. Maintain SELL on the stock on valuation grounds with an unchanged fair value estimate of S$3.41.
Duty Free International Near term challenges at Thai border
■ RM9.6m FX gain boosted 3Q17 bottomline; excluding that, 9M17 core net profit was below expectations.
■ Key miss stems from sales slowdown in Malaysia-Thai border towns, which could remain challenging in the near term.
■ Bright spots were in stronger airport channel sales and improving gross margins.
■ DFIL declared 2nd interim DPS of S$0.0125 and proposed 2-for-5 bonus warrants.
■ Reiterate Add; potential M&As and higher-than-expected dividends are potential rerating catalysts.
UOL Group Limited
The Slow and Steady Wins the Race
SINGAPORE | REAL ESTATE (DEVELOPERS) | INITIATION
Two new Singapore developments projects slated to be launched for sale in 2017 and 2018
Acquired two mixed-use buildings in London in 2016; Expect cap rate compressions amid low supply and vacancy rates of offices in Central London
|UOB KAY HIAN
Sembcorp Marine (SMM SP)
Buoyant LNG Demand Outlook Might See Contract Win Upside Surprise
Wood Mackenzie’s upgraded demand outlook suggests Asian LNG is set to see increased demand for LNG terminals. SMM is well-poised to benefit from its stake in GraviFloat. Outsized contract values for such products, combined with other non-rig awards could lead to upside surprise. We adjust our target price to S$1.61. Tactical trading upside of 3-4% to our target price exists for every S$500m contract win above our assumptions. Maintain HOLD on weak fundamentals. Entry price: S$1.45.
Silver lining in sight Improving market activity; upgrade to BUY. Market activity for the Securities market improved in 4Q 2016. On a q-o-q basis, turnover value was up 10%, after two quarters of decline (refer to chart on page 2). In terms of volume, 4Q 2016 posted a 23% increase. The Derivatives segment is also stabilising after steep declines in 2Q and 3Q 2016. In terms of valuation, Singapore Exchange (SGX) is trading at 20x FY18F, which is near the low in recent years, and is also slightly lower than Bursa Malaysia’s 22x and 33x for HK Exchange.
Check out our compilation of Target Prices