| MAYBANK KIM ENG | CIMB |
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Keppel Infrastructure Trust (KIT SP) In cashflows we trust Defensible steady returns KIT, Singapore’s largest diversified infrastructure business trust, generates resilient, predictable cash flows underpinned by long-term concessions for assets concentrated in gas distribution, power generation and transmission, water and waste-to-energy segments. The portfolio holds organic growth potential, while the balance sheet has dry powder to consider acquisitions up to SGD1.5b as well (or c36% increase in assets). In our view, the business risks are unforeseen asset downtime, exposure to interest rates and overpaying for assets.
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Singapore Exchange 3QFY17 earnings preview ■ We expect SGX to report 3Q net profit of S$90.0m (+2% qoq, +1% yoy) on 20 Apr. ■ While securities market volumes returned, derivatives volumes softened on lower traded volume of equity index futures and options. ■ Listing fees could be supported by strong funds raised through new bond listings. ■ M&As and sustained recovery in securities ADVT remain the key catalysts. ■ Maintain Add and target price of S$8.09, based on 24x FY18 P/E (historical mean).
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OCBC |
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PACC Offshore Services Holdings: Weathering the downturn It has been a tough time for offshore and marine companies since the oil price crash in 3Q14. PACC Offshore Services Holdings (POSH) is still in relatively better position, with positive operating cashflows of US$38.2m in FY16 and US$69.6m in FY15. Net gearing was 1.0x in FY16, but the group has been enjoying good relations with its banks. As at 31 Dec 2016, it had undrawn bank lines of about US$282.9m. Meanwhile, the group has been able to secure contracts for its vessels from the Middle East, which is still holding up for now. We roll forward our valuations to blended FY17/18F NTA while keeping our multiple unchanged at 0.7x, such that our fair value estimate rises slightly from S$0.33 to S$0.335. Since our last report on 22 Feb 2017 in which we downgraded the stock of POSH to Sell, the stock price has declined about 7% and is now closer to our fair value estimate. As such, we upgrade our rating to HOLD. |
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| DBS VICKERS | UOB KAYHIAN |
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SPH REIT Paying fees in cash (as you wished) Maintain BUY, TP raised to S$1.04. The REIT Manager has elected to pay c.60% of base management fees in cash in 3Q17. Consequently, we factored in future fees payable in cash in our model. We believe this decision will be favourable to unitholders as the dilutive impact is now less. Despite c.3% drop in DPUs in the next few years, our TP for SPH REIT increases by 1% and DPU growth is strengthened and more sustainable. Total potential return increases to 12.3% from 11.5%.
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Oversea-Chinese Banking Corporation (OCBC SP) 1Q17 Results Preview: Growth In Fees And Contribution From Great Eastern We expect OCBC to achieve a respectable net profit of S$805m for 1Q17, down 6% yoy but up 2% qoq. We see growth from fee income, driven by wealth management, and higher but normalised contribution from Great Eastern. Unfortunately, asset quality for the oil & gas sector remains stressed and we expect credit costs to stay elevated at 42p. Maintain BUY as NIM should gradually recover on higher interest rates while credit costs are expected to taper off in 2018. Target price: S$10.75.
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