| CIMB | OCBC |
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No new stores; still a tough bidding environment ■ The group’s China supermarket is expected to be operational in 3Q17. ■ Maintain Hold given a lack of catalysts. Our TP remains unchanged at S$0.94.
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Frasers Commercial Trust: Uncertainties likely priced in Frasers Commercial Trust’s (FCOT) share price YTD has underperformed the FTSE ST REIT Index and STI. We believe this could be attributed to lease renewal uncertainties of FCOT’s major tenants, two of HP’s entities, at its Alexandra Technopark (ATP) property. Collectively, both tenants contributed 17.5% of FCOT’s gross rental income, as at 31 Dec 2016. We conservatively assume only partial renewal by HP, and lower our FY18 occupancy assumption at ATP from 95% to 80%. Our FY18 DPU forecast is consequently cut by 9.0%. Despite our revised forecast, FCOT is trading at FY18F distribution yield of 7.3%. This still comes in approximately 0.5 standard deviation (SD) above its 5-year forward mean of 7.0%. Hence, we believe uncertainties over its ATP asset have been priced in by the market. We reiterate our BUY rating on FCOT, but with a lower fair value estimate of S$1.39 (previously S$1.48), as we also factor in a higher risk-free rate in our model. |
| RHB | |
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Singapore Exchange (SGX SP, BUY, TP: SGD9.10) is enabling companies to seek a general mandate for an issue of pro-rata renounceable rights shares of up to 100% of the share capital from 50% previously. The enhanced rights issue limit is aimed at helping companies raise funds expediently for expansion activities or working capital. The boards of companies proposing such a rights issue must have formed the view that the enhanced share issue mandate is in the interests of the issuer and its shareholders. Companies must also make periodic announcements on the use of the proceeds as and when the funds are materially disbursed and provide a status report on the use of proceeds in the annual report. This will help listed companies raise more funding for their needs. We maintain BUY on SGX with a TP of SGD9.10. |
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| DBS VICKERS | UOB KAYHIAN |
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Oil and Gas Short-term blip in oil prices Brent prices breach the US$54/bbl floor on profit taking by money managers Further near-term downside possible, but we think medium-term prices are fundamentally supported Bargain hunt O&G stocks on pullback US stockpiling numbers served as a trigger for unwinding of money manager net long positions.
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Banking – Singapore Unexpected Boost From Real Estate The improved sentiment for the private residential market is positive for banks, although we see rising interest rates as a more dominant catalyst. In aggregate, housing loans and building & construction accounted for 40.2% of total loans for DBS, 43.5% for OCBC and 50.4% for UOB. Banks benefit from stabilisation in asset quality for housing loans. Maintain OVERWEIGHT. Our top pick is DBS due to its high-beta to rising interest rates, followed by OCBC.
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