ANALYSTS SAY: Buy, Sell, Hold (4 May 2017)

Sembcorp Industries

What might Neil do?

■ 1Q17 core net profit was slightly above our expectation, forming 28% of our FY17F, thanks to higher land sales from urban development and better TPCIL performance.

■ The new CEO, Neil McGregor, will take c.6 months to review the group, focusing on performance, sustainability and value creation. Getting India right is key, we think.

■ We do not expect a big shake-up in the core businesses in the short-term. Utilities and urban development to remain core. Marine remains an “investment”.

■ Recent share price weakness could have priced in the weak India earnings. Upgrade to Add as we see upside from more cost rationalisation efforts and M&As.

■ Downside risk is failure to get a PPA by 4Q18 for SGPL. Our target price is based on SOP valuations.

Read More ...

Genting Singapore (GENS SP)

1Q17 Preview: Legs To Run Some More?

Lift TP by 14% to SGD1.25; maintain BUY

GENS will report 1Q17 results on 12 May 2017. While it may have ceded mass market share in 1Q17, we believe it will regain this in 2Q17. Factoring in higher VIP volume and lower VIP rebate rates, we lift our EBITDA by 14-16% and our TP by 14% to SGD1.25. This remains based on 12x FY17E EV/EBITDA, its eight-year mean. We now estimate 1Q17E EBITDA of SGD250m (4Q16: SGD233.7m, 1Q16: SGD192.5m). Maintain BUY with catalysts expected from a potential Japanese casino license. Risks to our call include below theoretical VIP win rates and more bad debts.

Read More ...

PHILLIP SECURITIES

DBS GROUP HOLDINGS LTD

Profit Boost from Wealth Management

SINGAPORE | BANKING | 1Q17 RESULTS

 1Q17 PATMI of S$1.245bn was above our estimate by 12%.

 Surprise came from lower-than-expected provisions. But a flat y-o-y net interest income growth was in line with our expectations.

 Maintain “Reduce” rating with a higher target price of S$17.24 (previously S$16.73), pegged at unchanged 0.95x FY17F book value (excluding perpetual capital securities).

Read More ...

BreadTalk Group: 1Q17 within expectations

BreadTalk Group released its 1Q17 results yesterday evening, which came in within our expectations. Revenue was down 4.5% YoY to S$147.6m due to Bakery and Food Atrium segments, while PATMI was up from S$2.4m to S$10.7m. This included a S$9.3m net capital gain from the divestment of the group’s investment in TripleOne Somerset. On the costs front, selling & distribution expenses and admin expenses were down 8% and 11%, respectively. Excluding one-off items, management stated that core F&B net profit would have been S$3.1m for 1Q17 vs. a loss of S$5.4m in 1Q16. Across segments, EBITDA for Bakery declined 13% to S$5.9m while Food Atrium and Restaurant were up 417% to S$4.9m and 14% to S$7.4m, respectively. We are keeping our HOLD rating and fair value estimate of S$1.21 for now. Separately, an interim special dividend of 2.0 S-cents/share or S$5.6m has been announced, representing ~60% of the divestment gain from TripleOne Somerset.

Monthly Strategy

Uplift to 3,250

 STI heading towards 3250 before correcting

 External factors to drive economy rather than domestic – Venture Corp

 Interest picking up for hospitality REITs – Picks CDL HT and OUE HT

 Three large caps vulnerable to profit taking at STI 3250 – City Dev, Keppel Corp and UOB

Key events in May There is cautious optimism that the positive corporate earnings revision trend can continue for the rest of the 1Q17 results season currently underway. To date, we have revised FY17F and FY18F earnings by 0.6% and 0.8% respectively on a q-o-q basis. With expectations high for a Macron victory at the second round of the French presidential elections, equity and currency markets may not see a repeat of the positive first round reaction, while a victory for Le Pen will certainly unsettle markets. The outcome of this month’s FOMC meeting is unlikely to have a major impact on equity markets. Investors expect the FED to hold rates steady at 1% at the FOMC meeting this week, with a hike only in June.

Read More ...