| CIMB | RHB |
|
Tech Manufacturing Services Upside potential intact for our top picks ■ Industry forecasters Gartner and SEMI believe the semiconductor equipment upcycle will last until 2018F, with automotive and Internet of Things (IoT) as long-term themes. ■ We believe further re-rating for tech manufacturing services stocks would have to come from positive earnings surprises, M&As or special dividends. ■ We opine that an M&A between Memtech and Sunningdale would have merits. ■ Our top picks are AEM, Jadason, Memtech and Sunningdale.
|
CapitaLand Commercial Trust Divestment Of Wilkie Edge Although CCT’s proposed divestment of its integrated development, Wilkie Edge is at a hefty premium to book value, concerns remain as to how management plans to offset the DPU shortfall arising from its recent divestments. With a strengthened balance sheet, we believe CCT could potentially acquire a minority stake in Asia Square Tower 2 along with CapitaLand, which, based on a media report, is in exclusive negotiations to acquire the property. However, the critical factors to watch out for include the potential acquisition price and whether the acquisition would be yield accretive. We also expect some near-term overhang from the conversion of convertible bonds to equity, with the share price currently trading at ~17% premium to the conversion price. Amid these uncertainties, we maintain our TAKE PROFIT recommendation on the stock. Our TP of SGD1.68 is unchanged for now, pending a discussion with management.
|
| OCBC | |
|
Keppel Corp: Well-placed in the gas market Keppel Corporation (KEP) recently held a naming ceremony for Hilli Episeyo, the world’s first converted FLNG vessel, owned by Golar LNG. It had undertaken the conversion job for this vessel for US$735m, and is the first in a series of FLNG vessels - there will be the Golar Hilli, Gandria, and Gimi for now. According to Reuters, China is also making a strategic push into FLNG projects in Africa. KEP has a headstart in this complex solution versus its rivals, and is also able to go beyond the role of a traditional yard by bringing in key strategic players, financial investors and participate in the vessel design early on, amongst other factors. According to management, it is also able to offer solutions for the seamless delivery of LNG from end to end. Maintain BUY with S$7.36 FV on KEP.
|
|
| DBS | |
|
Japfa Ltd More stable outlook from Indonesia operation More stable poultry outlook from Indonesia offset by swine market in Vietnam. We believe Indonesia market poultry outlook will be more stable going forward due to government involvement in managing supply and demand. The culling program can be done repetitively by using Ministry of Agriculture Regulation No. 61/2016 as a legal basis. However strong contribution from Japfa Comfeed is partly offset by FY17 weaker outlook in Vietnam`s swine market.
|
|
Check out our compilation of Target Prices
