| CIMB | OCBC |
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CDL Hospitality Trust Underlying trends remain largely the same ■ FY16 DPU of 10.01 Scts (-0.5% yoy) was above our expectation, forming 108% of our full-year forecast. 4Q16 DPU of 3.11 Scts (+3.3% yoy) was at 34%. ■ Excluding the one-off consumption tax, FY16 DPU would have been 9.75 Scts, down 3.1% yoy. ■ Underlying trends remain largely the same: Singapore and Maldives remain challenging; Japan’s good performance is tapering; UK is affected by FX translation. ■ NZ to finally enjoy robust growth with the change in master lease. ■ Maintain Hold with higher DDM-based target price.
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CapitaLand Retail China Trust: Overcorrected – Upgrade to BUY CapitaLand Retail China Trust's (CRCT) FY16 results were within expectations. DPU dropped 5.2% to 10.05 S cents, or 97% of our full-year forecast, mainly due to a weaker yuan and higher property tax provision for Beijing malls. We believe CRCT has two catalysts for positive DPU growth in FY17. First, CapitaMall Minzhongleyuan appears to be on the cusp of a turnaround with the reopening of Zhongshan Avenue and commencement of Metro Line 6 in Wuhan. Second, beyond the full-year contributions from Xinnan to be expected this year, NPI margins at the asset are also expected to increase as retail space efficiencies are improved. After adjustments, our fair value drops slightly from S$1.60 to S$1.56 after applying a higher cost of equity of 8.7%. Having corrected 12% since its 3Q results were announced, CRCT’s current price levels appear to offer value given the DPU catalysts. We upgrade CRCT from a Hold to a BUY. |
| UOB KAYHIAN | |
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Keppel Corp (KEP SP) 4Q16: O&M Kitchen Sinking Keppel Corporation reported 2016 net profit of S$784m, which included several write-offs, largely arising from a rightsizing of its O&M unit. Excluding this, core net profit was S$903m, above our expectations. The rightsizing sees the closure of three Singapore yards and mothballing of two overseas yards. Property now dominates earnings at 79% of 2016 earnings, although profit margins for the property trading business remain suspect. Revise earnings by +5%, and revise target price to S$6.45. Maintain HOLD. Entry price: S$5.90.
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| CIMB | RHB |
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Keppel Corporation Scrubbing mode ■ FY16 net profit of S$784m was below expectations, forming 74% of our forecast and 85% of consensus. ■ O&M took in S$277m of impairment in 4Q16 for Can Do drillships, mothballing of supporting yards in Bintan and Brazil as well as write-down of investments. ■ Final DPS of S$0.12 was declared, bringing FY16 DPS to S$0.20, a 46% payout (FY15:40%). Management guided for 40-50% payout in FY17. ■ Maintain Reduce with a slightly higher RNAV-target price, incorporating revised target price for KTT and market value of Kris Energy.
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Viva Industrial Trust Resilient Amidst The Turbulence We expect Viva Industrial Trust to continue performing solidly in 2017 on the back of its favourable business park exposure (59% of assets) and master lease rent guarantees. AEIs at VBP are progressing well, with full contributions gradually kicking in this year. The CBA acquisition has been completed and will contribute positively from 1Q17 onwards. The stock offers a FY17F yield of 9.5%, the highest among the SREIT stocks in our coverage. Maintain BUY, with a TP of SGD0.85 (11% upside).
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