ANALYSTS SAY: Buy, Sell, Hold (12 May 2017)

City Developments (CIT SP)

Rallying ahead of fundamentals

Maintain HOLD; Limited upside after strong rally

A slow start to the year with 1Q17 net profit at just 14% of our full-year estimate. However, we expect future launches to lift earnings in the coming quarters. The surprise easing of cooling measures on 10 March has lifted investor sentiment. While we believe the overall impact of the easing is small as key measures holding down demand remain, buoyant sentiment could see near-term upside to home prices and sales volumes. Our sensitivity analysis shows that a 20% increase to our ASP assumptions could drive a 5% RNAV upside. Maintain HOLD with unchanged TP of SGD9.80 (18% discount to RNAV of SGD11.92).We see limited upside after the strong rally YTD. Downside risks from sharp interest rate hike and large fall in property prices. Prefer UOL (UOL SP, CP SGD7.10, BUY, TP SGD7.93) for sector exposure.

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Hock Lian Seng Holdings

5-year revenue visibility from Civil Engineering

SINGAPORE | INFRASTRUCTURE | 1Q17 RESULTS

 1Q17 results were below our expectations but expect earnings to accelerate as works at Changi Airport project is expected to accelerate and boost revenue in the next few quarters

 Performance in Civil Engineering (CE) segment remains stable with order book standing at S$915 million that can last till FY22

 Construction of Shine@Tuas industrial property development project on track to be completed in FY18; Expect sales to accelerate as sentiments improve

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CIMB

Wilmar International

Upgrade to Add due to emerging catalysts

■ Strongest 1Q core net profit since 2013.

■ Oilseeds and grains, tropical oils and associates are key earnings drivers.

■ Higher reported net profit due mainly to gain from investment securities.

■ We are positive on the possible plan to separately list its China operations.

■ Upgrade to Add; key catalysts are strong 1Q earnings and plans to unlock value.

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Health Management Intl: 3QFY17 core PATMI up 12%

Health Management International (HMI) reported its 3QFY17 results, with revenue up 6.7% YoY to RM107.7m, mainly due to higher patient load and average bill sizes in its two hospitals – Mahkota Medical Centre and Regency Specialist Hospital. We note that ‘other losses’ of RM0.3m was recorded vs. a RM3.7m gain last year, attributable to the weakening of MYR resulting in FX charges. In addition, the acquisition of noncontrolling interests in its two hospitals resulted in a one-off incurrence of RM7.3m in professional fees and other related costs. This acquisition was completed on 27 Mar. Thus the group recorded a net loss of RM1.6m, vs. a PATMI of RM8.7m in 3QFY16. Excluding non-operational and one-off items, core PATMI rose 11.6% to RM7.1m and 9MFY17 core PATMI was up 28% to RM21.6m. Looking ahead, 4Q17 and FY18 earnings should offer clarity to investors on earnings, given the consolidation of ownership in both hospitals and less one-off costs. We continue to believe the group is on a healthy growth momentum, backed by a multi-strategy approach and strong management team. We maintain our BUY rating and DCF-derived (base year FY18) fair value estimate of S$0.80.

Food Empire Holdings

Rise Of The CIS

Food Empire’s 1Q17 core PATMI of USD5.0m has came in above our as well as consensus’ expectations. Except for the market in Ukraine, all the CIS markets showed tremendous growth in sales on the back of currency appreciation and a change in business model. Moving forward, we expect sales from Indochina to pick up as the company expands its operations in Myanmar. We lifted our TP to SGD0.85 (from: SGD0.76), implying a 46% upside from current levels and maintain BUY.

Outperformance by Kazakhstan and CIS markets.

Sales from Kazakhstan and the other markets in the Commonwealth of Independent States (CIS) grew by more than 100% YoY to USD9.2m. According to management, this was due to a change in the business model whereby the company reduced the price compensation to distributors and promoted more aggressively. We believe this is also in part attributed to the appreciation of the Kazakhstan Tenge (KZT) and the other currencies in the CIS. Sales from Russia also grew by 23% YoY on a stronger RUB. These were however partially offset by a lower revenue (-15% YoY) and sales volume in Ukraine. We expect the markets in Russia, Kazakhstan and the other CIS markets to continue their strong performance in 2017.

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