| CIMB | MAYBANK KIM ENG |
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Singapore Strategy Expect lacklustre 1Q17 ■ We could see some negative surprises in the capital goods and transport sectors. ■ Potential misses are: KEP, STE, SCI and SATS. ■ Potential beats are: Singtel, SMM, SIE, Best World and Valuetronics. May not be a stellar 1Q17 ● Our preliminary assessment on indexed names and Alpha picks showed potential for negative surprises in the upcoming results season. However, EPS is unlikely to be cut significantly on hopes for a pick-up in subsequent quarters. We keep our SSTI target of 3,195 (based on 14x on CY18 market core EPS).
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Singapore Macro Preview: MAS to Stay on “Neutral”, Expect Robust 1Q GDP +2.8% Both the Monetary Authority of Singapore (MAS) policy statement and 1Q GDP flash estimate will be released on Thursday 13th April. MAS Preview: “Neutral” in April, Possible Shift to “Slight Appreciation Bias” in October We expect the MAS to maintain the current neutral policy stance, with no change to the width, slope or level of the S$NEER policy band. Growth is recovering, but inflation is only rising very gradually. Core inflation is at +1.2% in Feb, at the low end of the MAS forecast of 1% to 2%. Headline inflation came in at +0.7% in Feb, also at the low end of the MAS forecast of 0.5% to 1.5%. We do not expect the MAS to change the inflation forecasts. Domestic cost pressures remain muted, in part because of a weak job market, mitigating the impact from higher commodity prices.
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OCBC |
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Straits Trading Co. Ltd.: A formidable real estate eco-system We initiate coverage on Straits Trading Co. Ltd. (STC) with a BUY rating and fair value estimate of S$2.73. We believe STC’s core competitive strength lies in the group’s sharp ability to allocate capital while leveraging on synergies across a wide-reaching eco-system of real estate partners. As a result, STC has developed a solid track record in creating value for shareholders while providing a stable dividend yield, notwithstanding its involvement in seemingly disparate sectors (i.e., real estate and resources) and its participation across various real estate investment vehicles. In addition, we see the privatization of ARA Asset Management as a positive for STC, which will see it swapping its 20.1% stake in ARA for a 20.95% stake in a company that indirectly owns ARA and also unlock S$48.2m in cash. Finally, we highlight various potential growth catalysts for STC ahead, including 1) the possible divestment of its Singapore residential portfolio, 2) the potential revaluation and redevelopment of MSC’s land site in Butterworth Penang and, 3) as the investment advisor for the newly listed NikkoAM-STC Asia ex Japan REIT ETF, meaningful upside in terms of recurring fee income alongside the ETF’s growth in AUM. |
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| RHB | DBS VICKERS |
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Thai Beverage Drink To Your Heart’s Content We initiate coverage on ThaiBev with a BUY and a TP of SGD1.10 (17% upside). We expect to see an upturn for ThaiBev now that the 100-day mourning period is over; following the Songkran festival, we expect alcohol consumption to normalise. Furthermore, the group is likely to use the new Excise Tax Act amendment as an opportunity to raise prices, thereby seeing a margin uplift in its alcohol segments. Further inroads into Vietnam via acquisitions would be a key catalyst to the stock price.
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Strike One… And Out • US missile attack on Syria a profit-taking excuse for recent ‘risk-on’ rally • Base case – knee-jerk reaction won’t last as the attack is a one-off response • What if Syria situation deteriorates – consumer staples, S-REITs, ST Engineering and CNMC Goldmine to outperform. Banks UOB, OCBC to underperform Geopolitical risk in focus. The US launched a missile attack against Syria last Friday in response to Assad’s use of poison gas against civilians. The concern is that the situation could escalate. Russia’s deputy UN ambassador said, before the strikes were made public, that any US military action would have “negative consequences.”
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