| MAYBANK KIM ENG | UOB KAYHIAN |
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Singapore Post Ltd (SPOST SP) Holding the fort Focus points: Trade Global, Alibaba and competition We hosted SingPost to our Invest ASEAN Singapore Conference on 22 Mar 2017. Key discussion points included: 1) competitive landscape and differentiation plans; 2) relationship with Alibaba and potential collaborations; 3) future plans for loss-making Trade Global. Also, major decisions are likely to be placed on hold before the new CEO joins in Jun 2017. Maintain HOLD with DCF-TP of SGD1.34 (WACC 7.6%; LTG 1%).
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Telecommunications – Singapore Assessing Threats From TPG Telecom While the entry of TPG Telecom as the fourth mobile operator will increase competitive intensity within the mobile space, this risk is offset by potential consolidation of the mobile industry over the next 3-5 years. Maintain OVERWEIGHT. Re-iterate BUY for Singtel with a target price of S$4.53. HOLD StarHub as share price has bottomed. WHAT’S NEW • Good results from TPG. TPG Telecom (Bloomberg ticker: TPM AU) reported growth in revenue, EBITDA and NPAT of +8%, +8% and +11% yoy respectively for the six months ending Jan 17 (1HFY17).
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| OCBC | |
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ComfortDelGro: Adapting to changing environment After numerous taxi companies including ComfortDelGro (CDG) earlier this year submitted plans to the Public Transport Council as they seek to introduce dynamic pricing of taxi fares (i.e. flat fee structure with no surcharges that is similar to the private hire cars’ fare structure), PTC and Singapore’s Land Transport Authority (LTA) on 17 Mar gave the green light as they said they have no objections to the proposals submitted. In our view, the move by five other taxi companies operating more than 10,600 taxis in total to partner Grab to offer dynamic pricing fare option through the new JustGrab function in the Grab mobile app will greatly dilute the market for GrabCar drivers with the influx of taxis offering same fares. We believe this move will further level the playing field between taxi companies and private hire car service providers by closing the gap between the different fare structures, increasing its ability to retain existing hirers. Therefore, as we expect increase in dividend yield over time as CDG receives cash from the sale of bus assets to LTA, reiterate BUY on CDG with an unchanged FV of S$2.95. |
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| CIMB | RHB |
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FY17: counter cyclical for sure ■ Discussions at 1-day NDR centered on the company’s business, total addressable market, length of current order cycle, and key risks and risk mitigation strategy. ■ AEM is at the cusp of a new order cycle but the key lies in the after-market for consumables (better margin) as the current order cycle will end at some point. ■ Maintain Add and TP, based on 2.95x FY17 P/BV. AEM needs more investor engagement ● Eleven participants representing nine fund management houses attended our 1-day NDR for AEM on 24 Mar. We sense that most attendees were unfamiliar with AEM’s business and its current opportunities.
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CapitaLand Boosting Recurring Income Stream Media sources have reported that CapitaLand is currently in exclusive negotiations to acquire Asia Square Tower 2 from Blackrock. We expect the pricing to be in the range of SGD2.1-2.3bn, assuming SGD2,700- 2,900psf for the transaction. The deal if concluded, would strengthen its recurring income base and strategically position it ahead of a potential rebound in the office sector. Sales in Singapore launches have picked up post increased marketing efforts but the residential segment in China is likely to see a slowdown from recent policy changes. Maintain NEUTRAL with revised TP of SGD3.84 (from SGD3.60, 4% upside).
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