ANALYSTS SAY: Buy, Sell, Hold (21 Aug 2017)

Viva Industrial Trust

Semi-charmed kind of life

■ VIT has been one of the top outperformers in the S-REIT universe, gaining c.22% YTD. Bloomberg consensus estimates that VIT will deliver 8.3% FY18F dividend yield.

■ The REIT appears to lead a semi-charmed life, with successful settlement of Jackson Square, completed AEI at Viva Business Park and potential upside from tax writeback.

■ VIT has reached a settlement with JIPL whereby it would receive an S$4.9m payment. Also, JS has proved resilient, with occupancy at 89% for 2Q17 (1Q17: 91%).

■ The manager believes that quarterly DPU will continue to improve qoq over the next 2-3 quarters, with contribution from the third phase of AEI for VBP.

■ Should VIT receive a favourable tax ruling, 1H17 tax expenses of S$1.7m (0.0175 Scts/unit) may be written back.

Read More...

Best World International (BEST SP)

Trust in BEST’s track record

Minimal impact from China’s crackdown Since Bloomberg published an article on 15 Aug 2016 relating to China’s crackdown on pyramid schemes, BEST’s share price has fallen by c.20%. We spoke to management and it clarified that the event has no or minimal impact on its business as it is not a pyramid scheme. We trust management based on its consistent track record. We have conducted a scenario analysis for investors who are worried about the China operations, which indicates that a China sales decline of 10-50% could reduce our FY18E EPS by 4-21% and our TP by 14-38% (SGD1.17-1.61). Maintain BUY and TP of SGD1.88, pegged to an unchanged 19x FY18E EPS (PEG of 0.7x using FY16-19E EPS CAGR of 27%). We ascribed a c.30% discount to the PEG of 1.0x for regulatory risks. BUY on weakness.

Read More ...

Yoma Strategic Holdings: Larger ownership stake of SHC after RTO

Yoma recently announced that the consideration for SHC Capital Asia Limited’s (SHC) acquisition of a target company, through the issuance of new consolidated SHC shares, will be reduced from ~S$70.7m to ~S$69.7m. As announced in October 2016, this target company would hold Yoma’s tourism related businesses that the group is looking to spin off as part of a Reverse Take-Over (RTO) of SHC. This reduction was due to the target company agreeing to assume certain liabilities amounting to ~S$980.9k. Consequently, we estimate that Yoma’s post RTO shareholdings in SHC will now increase from 53.48% to approximately 54.1% before any compliance placement. We reiterate our view that the proposed spin-off of the group’s tourism assets into an independent platform is a positive one. The group will be better positioned to focus on its core business units while also participating in Myanmar’s growing tourism market through a specialized yet separate platform. Maintain HOLD with an unchanged fair value estimate of S$0.58.

Plantation – Singapore

2Q17 Results: Weaker Earnings qoq On Lower Production

2Q17 production was within expectation. FR’s results were below expectations due to lower sales volume. BAL outperformed peers with positive qoq earnings growth supported by the strongest production growth for 2Q17. We expect the production recovery to continue in 2H17, but the yoy increase in 2H17 will be smaller, and there will be better refining margins for 2H17. BAL is likely to outperform its peers in 2H17 on stronger production and lower costs. Maintain MARKET WEIGHT.

Read More ...

Singapore Industrial REITs

Buying opportunities still exist, despite sector weakness

SINGAPORE | REAL ESTATE (REIT) | UPDATE

 Maintain Equal Weight view on Industrial REITs sub-sector.

 Oversupply situation abating, and we believe rents to bottom by end-2018.

 Occupancy has not picked up, despite higher industrial activity.

 Top-down strategy of buying REITs that are positioned to benefit from the shift towards higher value-added manufacturing: A-REIT and MINT are our favourites.

 Bottom-up / special situation play: Trading Buy on Sabana REIT.

Read More ...