ANALYSTS SAY: Buy, Sell, Hold (22 Aug 2017)

Ho Bee Land

Banking on recurrent income

■ Strong recurrent income platform backed by a S$3bn office portfolio

■ Earnings growth to be driven by handover of China residential units, Australia projects largely sold

■ We anticipate the recovery of Singapore residential market to broaden in the medium term, thus allowing HoBee to monetise its existing projects

■ Maintain Add with a higher TP of S$3.39

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Singapore REITs: No major surprises; remain selective

All the 24 S-REITs under our coverage reported 2QCY17 results which came in within our expectations. On average, DPU growth was flat on a YoY basis, which was a moderation from the 2.4% increase registered in 1QCY17 but similar to the flattish performance for 2016. We believe further compression in S-REIT yields remains a possibility in the near-term, but recommend investors to buy on dips as valuations remain stretched. Maintain NEUTRAL on the S-REITs sector. Since we added CapitaLand Mall Trust (CMT) [BUY; FV: S$2.20] into our top picks list on 5 Jun this year on the premise that it was a potential laggard play, its share price has jumped 8.4%. Given this outperformance, we replace CMT with OUE Hospitality Trust [BUY; FV: S$0.82]. Our other top picks remain the same: Frasers Centrepoint Trust [BUY; FV: S$2.28], Keppel DC REIT [BUY; FV: S$1.39] and Frasers Logistics & Industrial Trust [BUY; FV: S$1.22].

Singapore Banks

A Clearer Path

More visibility ahead For 2Q17/1H17, OCBC and UOB’s performance improved but DBS posted weaker results. We revised our profit estimates for the banks by -2%- 5%/1%-10%/1%-11% for FY17-19E and also our TPs (links: DBS report on 7 Aug, OCBC report on 22 Aug, UOB report on 22 Aug). For FY17-18E, we think loan growth momentum is likely to be sustained at 6-9% YoY and higher interest rates should improve NIMs slightly. Banks could also benefit from a risk-on environment to drive higher non-interest income. UOB is now our preferred pick (previously DBS).

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Telecommunications – Singapore

iPhone 8: A Blessing And Curse

iPhone 8 is a stunningly beautiful must-have smartphone. Incumbent telcos are expected to leverage on iPhone 8 to lock in new and existing customers ahead of the entry of TPG Telecom. TPG has missed the boat for iPhone 8, at least for the initial launch phase, by commencing operations only in 2018. We have trimmed our target prices for M1 to S$1.98 and for StarHub to S$2.62 to factor in the higher handset subsidies incurred for iPhone 8. Maintain OVERWEIGHT.

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