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3QFY17: Tracking forecast but Optus is a worry

■ Results largely in line, with 9MFY17 core net profit at 78% of our FY17 forecast.

■ Singapore earnings grew on lower opex and narrower DL losses. Higher associate earnings were driven by Telkomsel and Globe.

■ Optus earnings fell on keen competition and higher device subsidies/content costs.

■ We cut FY18-19F EPS by 8-11% to factor in lower earnings at Optus and Bharti.

■ Maintain Add with 9% lower target price of S$4.10. Attractive yields of 4.6-4.9%.


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Global Logistic Properties Ltd: Fairly balanced risk-reward here

3QFY17 PATMI fell 7% YoY to US$171m mainly due to the absence of a one-time syndication gain related to GLP’s first US portfolio in 3QFY16 and foreign exchange losses in 3QFY17. Adjusted for non-recurring items, core earnings and same-property net operating income both rose 22% and 7%, respectively, as scale of operations and fund management platform continues to grow. We deem these results to be mostly within expectations.  After updating our valuation model with the latest financials and being cognizant of a potential sale ahead as an option under the strategic review, we update our fair value estimate to our RNAV of S$2.87. While we are positive on GLP’s long term fundamentals, we see the risk-reward in its shares as fairly balanced at current levels and believe it could be judicious for long-time investors to take some profits off the table after a breathtaking 57% rally since Nov 16. Downgrade to HOLD.



Still an expensive voyage

Maintain SELL: good quarter, but momentum waning

3Q17 core PATMI of SGD65.1m was around 14% higher than our estimate and, we believe, beat consensus by c 6%. Revenues were actually softer than expected, but a sequential EBITDA margin growth of 60bps drove the lion’s share of the surprise. Management stated that the outlook for its airline-related business (c80% of revenue) remained very challenging and, going forward, similar quanta of margin uplift would be tough. Valuation is lofty at over 2SD above its five-year P/E mean. Our TP of SGD3.76 is based on 17x FY18 EPS (five-year PE mean).


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Frasers Hospitality Trust

Hospitable outlook Enhance liquidity to boost investor interest. We maintain our BUY call on Frasers Hospitality Trust (FHT) with a TP of S$0.75. While FHT has a portfolio of quality of hotels in key gateway cities and has a successful acquisition track record such as the purchase of Sofitel Sydney Wentworth, investor interest at times has been muted. We believe the increased free float post the recent rights issue should help allay investor concerns about its trading liquidity, thereby compressing FHT’s yield over time. In the meantime, FHT offers an attractive 7.7% yield with earnings upside from acquisitions.


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Fraser and Neave

Thirsty for acquisitions SINGAPORE | CONSUMER | RESULTS

 1Q FY17 Revenue/EBIT met our 25%/26% of our FY17 full year forecasts

 Margin compression amid subdued consumer sentiment in core markets  Dairies Thailand to continue bolstering earnings with stable contribution

 Higher market penetration in New Markets, but proceeds will be reinvested for continuous brand building efforts


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  • Lionel Lim