|MAYBANK KIM ENG||UOB KAYHIAN|
ISEC Healthcare (ISEC SP)
Operations on track and exploring more M&A
Expect healthy growth
We visited ISEC for an update. Three key takeaways: 1) expect healthy EPS growth for FY17E, driven mainly by contributions from acquisition of JL Medical clinics in Dec 2016. JL’s operations remain sound after the acquisition and it is on track to achieve its profit guarantee of c.SGD1.1m. 2) The ophthalmology operations in Malaysia continue to improve from higher patient volume, it has also added an eye centre in Mar 2017. 3) ISEC continues to explore more M&A opportunities. Maintain BUY and TP of SGD0.40, based on 23x FY18E EPS, pegged to the longterm forward P/E mean of ISEC.
Sembcorp Industries (SCI SP)
Better 2Q17 Plant Performance In India To Improve Earnings
Sembcorp Industries’ India operations reported a 5-11ppt qoq improvement in plant load factors (PLF) for 2Q17. Spot electricity prices were flat (-1% qoq), so the higher PLFs should translate to higher earnings. Losses for its India operations should narrow from 1Q17 levels on the back of better operational performance. No change to our earnings estimates for now as we await 2Q17 updates. Maintain BUY and target price of S$3.66.
■ Results in line, 3QFY17 DPU forms 24.3% of our FY17F forecast.
■ Positive rental reversion of 3.7%, portfolio committed occupancy at 100%.
■ Slight addition of NLA at Clementi Mall could provide c.S$0.8m of annual rents.
■ Low gearing of 25.6%.
■ Maintain Hold, with a slightly higher TP of S$1.04.
To jointly redevelop Golden Shoe Car Park
CapitaLand (CAPL) announced that, for the redevelopment of Golden Shoe Car Park in Raffles Place into an integrated development, it will form a joint venture with CapitaLand Commercial Trust (CCT) and Mitsubishi Estate Co Ltd (MEC). CAPL and CCT will both hold 45% stakes in the JV while MEC will take a 10% interest in two unlisted special purpose sub-trusts to own the office and serviced residence components of the development. The total development cost is estimated at S$1.82b and will be funded by the JV partners in proportion to their respective interests. The new integrated project will be 51 stories high and have a GFA of about one million square feet, of which 29 floors will comprise premium Grade A office space and an eight storey 299-unit serviced residence to be managed by The Ascott Ltd – CAPL’s serviced residences unit. Maintain BUY on CAPL with an unchanged fair value estimate of S$4.07.
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