| CIMB | MAYBANK KIM ENG |
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Singapore Press Holdings Potential sale of M1 stake? ■ Axiata, Keppel & SPH announced that they are jointly undertaking a strategic review of their stakes in M1. ■ At M1’s current share price of S$2.19, SPH could receive proceeds of S$0.17/share for sale of its 13.4% stake. ■ Injection of Seletar Mall into SPH REIT in the pipeline, with potential special dividend as the key re-rating catalyst, in our view. ■ Media industry still facing structural challenges and economic headwinds. ■ Upgrade to Hold with higher SOP-based target price of S$3.36. The stock currently offers FY17-19F dividend yields of 4.8-5.1%.
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Singapore Economics Export Recovery Strengthens and Broadens in February Singapore’s export momentum continues in February, as the recovery broadens to non-electronics. Electronic exports also broaden beyond Integrated Circuits (ICs), which led the earlier improvement, to disk media products and parts of PC. Export growth also broadened to positive growth across all the Top 10 markets, where previously European Union and Malaysia were still negative. This supports our view that the manufacturing and trade momentum remains strong, and will continue to lead and support growth in 2017. Non-oil domestic exports (NODX) accelerated by +21.5% in Feb-17 from a year ago to extend its growth into the 4th consecutive month, boosted by both electronics (+17.2%) and non-electronics (+23.3%). Non-oil reexports (NORX), which is a proxy for wholesale trade services, grew a robust +10% from a year ago. For Jan and Feb combined, NODX and NORX increased by +14.7% and +5.5% respectively.
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| UOB KAYHIAN | |
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Keppel Corp (KEP SP) Borr Drilling Eyes Transocean’s Five Newbuilds at Keppel Upstream reported that Borr Drilling is looking to acquire Transocean’s jack-up fleet (including its five newbuilds at Keppel) for US$1.2b. A transaction seems imminent as Borr is already raising capital of the same amount. Estimating US$708m for the newbuilds (original price tag: US$1.1b), we estimate the impact to Keppel is a loss of 8-14 S cents/share. Actual impact is subject to the final terms of the deal. Maintain HOLD. Our target price remains at S$6.45. Entry price: S$6.10.
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