| CIMB | PHILLIP SECURITIES |
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DBS Group Earnings beat on lower provisions ■ 1Q17 net profit of S$1.25bn was above our estimate (S$1.11bn) and consensus (S$1.03bn), on lower SPs and a record high for fee income, backed by WM fees. ■ Excluding one-offs but taking into account the S$350m in GP, we deem core net profit came in above at S$860m (20% of our FY17 forecast) and core ROE at 8%. ■ NIM expanded 3bp qoq to 1.74%, while loans grew 1% in constant currency terms. ■ NPL ratio was flat at 1.4% as three new oil & gas NPLs were offset by S$170m of NPL sales in India. This also boosted allowance coverage ratio to 103%. ■ We maintain our Hold call, with a higher GGM-based target price of S$18.75 (1.04x CY17 P/BV) as we tweak our assumptions for fee income growth and NIM.
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Sheng Siong Group No luck for new store so far SINGAPORE | CONSUMER | 1Q17 RESULTS 1QFY17 Revenue/PATMI met 25.8%/24.7% of our full year FY2017 expectations New stores growth to drive FY17F topline growth, while FY17F gross margin steady at c.26% Lack of new stores starting to worry us
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OCBC |
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CapitaLand Commercial Trust: Divests 50% of One George Street CCT announced that it would divest 50.0% of One George Street (OGS) and recognize an estimated gain of S$84.6m. After taking into consideration the estimated transaction and related costs of S$4.9m, the approximate net gain is S$79.7m. The agreed valuation of OGS for the transaction is S$1,183.2m or S$2,650 psf based on the building’s net lettable area, which is 16.7% above the property’s valuation as at 31 December 2016. Based on the asset’s net property income of S$38.0m for the last 12 months preceding 31 March 2017, the transaction valuation translates to a net property yield of 3.2% per annum. After the transaction, OGS will be owned by a limited liability partnership (OGS LLP) which is 50% held by insurer FWD group, with the remaining 50% held by CCT. We believe the price for the divestment of OGS is sufficiently attractive and will increase the trust’s financial flexibility to recycle capital into other projects. Maintain HOLD with our fair value estimate of S$1.53 under review.
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| UOB KayHian | RHB |
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STRATEGY – SINGAPORE Alpha Picks: Removing SMM Short And Buying CCT We lock in profits from our short position in SMM after its solid returns of 19% since inception. Otherwise, we stick with our April picks and add CCT as a new alpha pick. WHAT’S NEW ♦ SMM and China Aviation Oil stand out. Our key picks that stood out in April were SMM and China Aviation Oil. SMM declined 15% in April for a total return of 19% since we included it into Alpha Picks as a short candidate in March. On this basis, we lock in our gains as a lot of negative news, particularly its weak 1Q17 results, appear to have been priced in. As for China Aviation Oil (CAO, BUY, TP: S$2.26), the stock rose 6% in April and has returned 17% since its inclusion into our Alpha Picks. ACTION ♦ Adding in CapitaLand Commercial Trust (CCT) and removing SMM. We make adjustments to our large-cap picks by locking in profit on our SMM short and introducing CCT into our Alpha Picks Buy list, with a target price of S$1.75.
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Manulife US REIT A Solid Performance MUST reported strong 1Q17 results with DPU exceeding its IPO forecasts by 8.6%. The higher DPU was backed by a higher occupancy, rental increase from rent-review and lower interest costs. We expect MUST to continue benefitting from the strong underlying fundaments in the US office market with its strategically located three freehold US office properties. MUST offers superior FY17F-18F dividend yields of 7.5% and 7.6% respectively, a good 100-150bps above the office S-REITs average. Maintain BUY, with a USD0.96 TP.
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♦ Sticking with Citic Envirotech and Food Empire. Despite the share price weakness of these two stocks, we remain positive as we see potential contract wins by Citic to be price catalysts. In addition, we believe Food Empire’s recent share price pull-back as a buying opportunity as prospects look intact. 
Check out our compilation of Target Prices
