| CIMB | UOB KAYHIAN |
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Banks 1Q17 earnings preview ■ We expect NIMs to remain muted and provisions to still remain high in the upcoming 1Q17 results, hence core ROEs could stay depressed at 8-9%, similar to 4Q16’s. ■ We expect UOB’s core ROE to outperform peers due to its ability to tap on excess general provisions (GP), while specific provisions (SP) still remain high for oil & gas. ■ Possible bright spots include higher fee income (DBS, OCBC) and trading (UOB). ■ Expectations of higher interest rates and more stable economic outlook have driven sentiment. But we remain wary of anemic loan demand and its effect on margins. ■ Maintain Underweight. We would look to trim exposure prior to the expected lacklustre 1Q17 earnings. Order of preference remains UOB, DBS, and OCBC.
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Memtech International (MTEC SP) An Under-appreciated Gem Companies operating in the precision engineering space experienced a sector rerating over the last few months, driven by stronger 2H16 results and M&A interest. Memtech remains one of the sector laggards. Memtech’s earnings momentum is likely to continue into 2017 and investors can look forward to continued earnings momentum, increase in dividend frequency and potential dividend surprises. M&A remains a possibility given the automotive exposure and strong cash flow.
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PHILLIP SECURITIES |
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Raffles Medical Group Ltd Leveraging on Asia giant for growth SINGAPORE | HEALTHCARE | 1Q17 RESULTS 1Q17 Revenue/PATMI met 22% of our FY17 full year forecasts. Revenue from both hospitals and clinics were softer than expected. We expect revenue from clinics to support FY17F top-line growth following new contribution from RafflesMedical Orchard and MCH. We expect both to breakeven by end-FY17 Staff costs continue to drag profitability while RMG gears up for expansion Two new hospitals in China with aggregate bed capacity of 1,100 slated for completion by end-2018
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| OCBC | DBS VICKERS |
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Mapletree Industrial Trust: Still resilient; BUY with higher FV Mapletree Industrial Trust (MIT) reported its 4QFY17 results which met our expectations. Gross revenue increased by 4.5% YoY to S$87.8m, while DPU came in at 2.88 S cents, representing YoY growth of 2.5%. Despite headwinds facing the industrial sector, MIT’s operational performance remained largely resilient. Its average portfolio gross rental rate inched up 0.5% QoQ to S$1.94 psf/month in 4QFY17, while overall occupancy rate improved by 1 ppt QoQ to 93.1%. There were mixed signals from renewal leases signed during the quarter, as three out of five of its segments recorded positive rental reversions. In terms of financial position, MIT’s balance sheet remains strong, with a low aggregate leverage ratio of 29.2%, as at 31 Mar 2017. We incorporate this latest set of full-year results in our model, and fine-tune our assumptions. Our FY18 and FY19 DPU forecasts are reduced marginally by 0.5% and 0.2%, respectively. However, we maintain BUY on MIT with a higher fair value estimate of S$1.93 (previously S$1.88) as we roll forward our valuations. |
CapitaLand Retail China Trust Key assets performed better than expected TP raised to S$1.68. While CapitaLand Retail China Trust (CRCT) will face headwinds in the form of a weaker RMB exchange rate, higher property taxes in Beijing, and an increase in interest rates over the next few quarters, we believe these risks are largely priced in. The steady performance in 1Q17 leads us to believe that the market had underestimated the impact of positive rental reversions at key assets, namely Xizhimen and Wangjing, in the previous quarters. We have increased FY17F DPU from 10.1Scts to 10.6Scts, and raised our TP to S$1.68 from S$1.60.
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