| PHILLIP SECURITIES | CIMB |
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Centurion Corporation Limited Strong Performance Despite a Tough Operating Environment
1Q17 PATMI of SGD10.7mn met our estimates. Newly acquired UK assets, higher occupancy at ASPRI-Westlite Papan and improvements in student accommodation rental rates contributed to stronger revenue growth. Maintain Accumulate rating with higher target price of S$0.48, previously S$0.42.
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Global Logistic Properties Benefiting from cap rate compression
■ FY3/17 core net profit of US$270m was largely within our expectations, forming 96% of our forecast. ■ Better results were due to higher revaluation surplus and improved organic growth. ■ FY18F development starts and completions guidance slightly higher on yoy basis. ■ Maintain Hold with a higher TP of S$3.05.
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OCBC |
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Singapore Airlines: Spending to renew its youth Singapore Airlines’ (SIA) FY17 revenue fell 2.4% to S$14.9b with weaker performances at passenger airlines and cargo airline due to yield erosion, and other nonrecurring income. Consequently, with a 2.1% reduction in operating expenses on cheaper fuel costs, FY17 core PATMI was below expectations as it declined 16.0% to S$372.1m, forming 80.8% of our FY17 estimate. On the back of disappointing earnings, SIA is recommending a final dividend of S$0.11 (FY16: S$0.35), bringing the total dividend payment for FY17 to S$0.20 (FY16: S$0.45). Looking ahead, we believe the worst may not be over for SIA as we continue to expect yield erosion to persist on overcapacity and sustained low oil price environment. Coupled with heavy capex spending ahead alongside higher staff costs to handle expanded fleet, outlook of SIA will likely remain weak. On missed core FY17, we cut our FY18F PATMI by 9.6% and introduce FY19 estimates. Consequently, our FV decreases from S$10.36 to S$10.03 (0.9x FY18F P/B). Maintain HOLD. |
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| RHB | DBS VICKERS |
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Heeton Holdings (HTON SP, Not rated) Quiet beneficiary of Gaobeidian goldmine We believe Heeton Holdings is one of the few home-grown boutique developers that is poised to benefit from the recent pickup in residential property transactions. The Group has completed a string of developments recently, from joint venture projects such as KAP and KAP Residences, 121 Collection on Whitley and its wholly owned Onze@Tanjong Pagar. The developer will also be completing several other projects over the course of 2017, such as Westwoods Residences, its 50:50 EC development with Koh Brothers (86% sold), Rezi3Two and Trio. The Group is also recognising profits progressively on its joint venture project with Chip Eng Seng and KSH, namely the 1390-unit High Park Residences (20% stake), which has been fully sold. These project completions will bring in a steady stream of cash and enable the group to capitalise on the improving market sentiments to clear its remaining inventory.
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Singapore Airlines Persistent headwinds Maintain HOLD; soft yields amidst stiff competition remain a challenge. We remain neutral on Singapore Airlines (SIA) as its core earnings outlook remains patchy amid stiff competition and soft yields. With oil prices having moved off the bottom but yields remaining soft, we project overall EBIT to decline 15% yo-y in FY18F but net profit to improve 23% to S$445m – assuming no non-operating charges for FY18F. This represents a projected ROE of 3.4%, which is below SIA’s cost of capital. 4Q17 and FY17 numbers hit by weaker yields and nonoperating items. Passenger yields for SIA’s flagship business fell by 3.8%/4.7% in 4Q17/FY17, which led to weaker operating earnings for the segment and SIA Group in both 4Q and for the full year. Meanwhile, SIA also incurred non-operating charges such as SIA’s cargo provision for a fine (S$132m), write-down of Tigerair-related brand and trademarks (S$98m) and a loss on disposal of aircraft, spares and spare engines (S$52m), which were a further drag on the group’s bottom line.
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