ANALYSTS SAY: Buy, Sell, Hold (3 Aug 2017)

Starhub 2Q17: Still heading south

■ 2Q17 results were largely in line. 2H17 earnings to be weaker due to subsidies.

■ Mobile revenue remained under pressure yoy whilst pay TV decline accelerated.

■ Broadband revenue fell qoq for the third consecutive quarter. Fixed Enterprise revenue only grew a mild 0.6% yoy.

■ EBITDA margin eased 1.4% pts yoy on higher cost of services and device subsidies.

■ Maintain Reduce with a 2% higher target price of S$2.50. A good entry point is below S$2.20 (bear case) and exit point above S$2.80 (bull case).

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Sunningdale Tech (SUNN SP)

2Q17: Results Above Expectations; A Pleasant Dividend Surprise

Sunningdale reported strong 2Q17 results with core net profit rising over 57% yoy, driven by stronger gross margins and lower costs. The group gave upbeat guidance on a seasonally stronger 2H17, instilling confidence in the group’s prospects for the rest of 2017. Shareholders have been rewarded with a surprise maiden interim dividend. Maintain BUY with a higher PE-based target price of S$2.51.

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CapitaLand Limited: Firm set of 2Q17 results

2Q17 PATMI increased 97% YoY to S$579.3m mainly due to stronger operating numbers, higher revaluation gains from investment properties in Singapore and China and portfolio gains from the sale of Innov Tower in China and 18 rental housing properties in Japan. After accounting for one-time items, operating PATMI for the quarter clocked in at S$206.8m which was 21% higher YoY. In terms of the topline, however, 2Q17 group revenues declined 12% YoY to S$992.4m mostly because of lower contributions from development projects in Singapore, partially offset by firmer contributions from Chinese developments and rental income from newly acquired and newly opened properties. 1Q17 operating PATMI now cumulates to S$544.6m, which makes up 56% of our full year forecast, and we judge this quarter’s results to be broadly within expectations. We will meet management this morning at an analyst briefing and, in the meantime, maintain BUY with our fair value estimate of S$4.07 under review.

BreadTalk Group

Steadily Cruising Along

BreadTalk has generated a 55% return YTD. We now roll over our valuation to FY18F and derive a higher TP of SGD1.83 (from SGD1.60, 2% upside). Downgrade to NEUTRAL as we think the market has priced in BreadTalk’s near-term growth outlook. Key upside catalysts for the stock includes divestment gain from property investments, faster-than-expected roll out of bakery franchisees and reduction in effective tax rate.

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