ANALYSTS SAY: Buy, Sell, Hold (25 Aug 2017)

Health Management Int’l (HMI SP)

Disrupted by seasonality shift

Slight miss from earlier Hari Raya; Lowered EPS/TP

FY17 earnings missed our forecast but were in line with the street, at 94% of our FY17E and 100% of consensus. Core earnings grew 64% YoY in 4Q17, due to the first full quarter consolidation of its minority stakes. Softer revenue growth of 5% YoY in 4Q17 was due to a change in seasonality, as Hari Raya came earlier, in Jun 2017 vs Jul 2016. HMI has started to see more patients in Jul 2017. We cut our EPS by 3-5% after lowering revenue forecast and our DCF-based TP fell 6% to SGD0.80. To sustain growth, it will: 1) increase the operational beds for both hospitals; 2) start construction for the extension block of Regency Hospital; and 3) seek acquisition opportunities in Malaysia and the region. Maintain BUY.

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Keppel Corporation

Gassing up

■ Keppel secures a US$400m contract for two LNG containerships, bringing YTD orders close to S$900m, in line with our S$1.5bn target. Order book lifted to c.S$4bn.

■ This is positive as the maiden Jones Act vessels open doors to more non-rig contracts. We estimate EBIT margin to be in the high single-digit range.

■ Maintain Hold and TP of S$7.24, still based on SOP valuations.

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GuocoLand (GUOL SP)

Reaping The Rewards

GuocoLand is a key beneficiary of property sector turnaround and rotational interest. Overhang related to litigation on Beijing Dongzhimen (DZM) project ownership and high gearing have been removed, paving the way for a continued rerating of the stock. Expect strong recurring earnings going forward upon stabilisation of Tanjong Pagar Centre. GuocoLand is trading at a deep 37% discount to its RNAV of S$3.63/share. Resume coverage with BUY and target price of S$2.80.

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First REIT: Looking forward to positive base rental revisions

PT Siloam International Hospitals TBK (Siloam) released their 1H2017 operational update, which gave a mixed bag of indications, in our opinion. Outpatient visits in 1H2017 increased 9% YoY to ~1.1m, but in-patient admissions fell by 2% YoY to ~85.9k YoY. Still, we believe that healthcare spending in Indonesia has room for further growth in the long term. Separately, we continue to expect positive base rental revisions for First REIT’s (FREIT) Indonesian assets. Looking ahead, Siloam appears to be looking to expand its network further, from its current 31 hospitals to 50 hospitals in 25 cities by 2019, such that the pool of Right of First Refusal assets for possible injection into FREIT in future will invariably expand. Based on our projections, FREIT is currently trading at a FY17F distribution yield of 6.3% and a P/B of 1.3x. We maintain our HOLD rating and fair value estimate of S$1.38.