| CIMB | OCBC SECURITIES |
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Best World International Ltd Record profits and record dividends ■ Huge earnings beat. 4Q16 net profit (+231% yoy) blew past our expectations. FY16 formed 114% of our and consensus full-year forecasts. ■ Best World’s twin growth engines (Taiwan and China) continue to drive the group and we do not see them slowing down. ■ Final dividend of 3.0 Scts declared. 2-for-1 share split proposed. ■ We raise our FY17-18F EPS on higher sales growth in both Taiwan and China. Our current EPS and TP do not yet account for the proposed share split. ■ Our TP rises to S$2.97 on our EPS upgrades and as we roll forward to CY18. Maintain Add.
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Sembcorp Marine: A crisis breeds innovation Sembcorp Marine (SMM) reported a 37.5% YoY drop in revenue to S$829.9m and a net profit of S$78.8m in FY16 vs. our full year forecast of S$80.4m. Excluding nonoperating items, net profit was even higher at S$97.7m. There were no asset impairments in 4Q16. With OPEC’s resolve to support oil prices and a stabilization in the oil market, sentiment continues to improve, and the likelihood of impairments has gone down significantly. Though the return of drilling orders will still take some time, SMM is hopeful of securing new orders relating to Gravifloat, which enables it to offer a suite of near-shore redeployable, modularized solutions that can be built off-site. Indeed, SMM is currently in multiple discussions with different customers. Taking into account the points above, we increase our valuation to 1.4x FY17F book (still below 1 s.d. of historical mean since 2003), and our fair value estimate rises from S$1.43 to S$1.76. Upgrade to BUY. In line with our expectations, SMM has declared a final cash dividend of 1.0 S cent/share, following an interim dividend of 1.5 S cents/share. |
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Genting Singapore Big Ambitions In The Land Of The Rising Sun Genting Singapore has signalled its intention to go all out on Japan once the local authority firms up the development plan. This may involve putting in bids at more than one location, as the group is looking to mark its presence in the next holy grail of the global gaming market. On its existing operations, bad debt provisions have further stabilised while both mass and VIP luck factor held stable in 4Q16. Maintain NEUTRAL with our DCF-based TP revised to SGD0.93 (from SGD0.82, 5% downside). |
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Genting Singapore Onwards and upwards More efficient capital structure to trigger further re-rating. We maintain our BUY call on Genting Singapore (GENS) with a revised TP of S$1.20. GENS announced that it will be moving towards a more efficient capital funding model over the next three years. However, it indicated that it may not lift its DPS beyond the 3 Scts in the near term to reserve extra liquidity ahead of a potential bid for a Japanese casino. While this is disappointing, we believe GENS could potentially gear up its balance sheet to a modest level, which should result in better ROEs, triggering a further re-rating of the stock.
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