ANALYSTS SAY: Buy, Sell, Hold (28 Aug 2017)

CEI Limited

Dividend stock

■ 1H17 results reported on 4 Aug 17 saw a 23% yoy decline in net profit to S$3.6m due to a 2.1% yoy decline in sales and a 10% rise in operating expenses.

■ Interim DPS of 1.04 Scts and special DPS of 3.00 Scts were declared. Dividend payout ratio in 1H17 was 97%.

■ Balance sheet remains strong with net cash of S$5.8m at end Jun-17.

■ We update our forecasts (last update was 13 Feb 17) to reflect the weaker revenue performance and higher operating expenses.

■ Maintain Add with lower target price of S$1.08 (9.74x P/E, 10-year average).

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Singapore Property Resurgent Enbloc Market could Promote Rational Land-Banking

Opportunities plenty to replenish land bank

We believe investors are increasingly concerned that escalating land prices could lead to a margin squeeze for property developers. While it is a valid concern, we opine that the resurgent enbloc market offers alternative land banking opportunities for developers and could ease upwards pressure on land prices. Furthermore, it effectively front-loads demand and pushes out supply. We raised our TP for UOL to SGD9.43 (from SGD9.05) to reflect higher TP for UOB (UOB SP, BUY, TP SGD26.40) and market value of UIC (UIC SP, Not Rated). UOL and CityDev continue to be the best large-cap picks to an impending rebound in Singapore’s property prices. For investors with lower liquidity thresholds, recently initiated GuocoLand offers compelling relative value with improving fundamentals. Maintain POSITIVE view on developers.

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Health Management Intl: Looking forward for FY18

Health Management International’s FY17 revenue growth was deemed to be slower as the group saw two Hari Raya periods in this financial year - in Jul-16 and Jun-17, which are seasonally slower. Nevertheless, FY17 revenue was up 9.5% to RM435.8m, and excluding one-offs and FX, core FY17 PATMI of RM32.1m was within our expectations. Looking ahead, FY18 earnings should offer further clarity to investors with fewer one-off costs. The group aims to pay down half of the acquisition debt by year end, while they need to gear up for the construction of Regency’s extension block. Nonetheless, the group is able to generate strong cash flows, and we believe our investment thesis remains intact with the group on a healthy growth momentum, as both hospitals work on expanding services, operational excellence, as well as capacity to effectively capture the expected increase in demand from both local and foreign patients. We maintain our BUY with FV of S$0.80 unchanged.

Singapore Coal Sector

The fastest growing coal producers

SINGAPORE | MINING| SECTOR UPDATE & INITIATION

 Singapore listed coal producers are growing production by 60% this year

 Indonesia domestic demand for coal is expected to double in ten years

 Coal prices to remain stable as China keeps demand-supply in check Investment Thesis Indonesia is the sweet spot for coal production: Indonesia enjoys demand from two captive sources. Firstly, Indonesia fulfils 40% of China’s imported coal requirements. Secondly, Indonesia will provide the spurt in demand domestically. We expect domestic demand for coal to ramp from 85mn tonnes in 2017 to 155mn tonnes in 2026. Demand for coal in Indonesia will be fuelled by the large roll-out of power plants. Indonesia aims to increase 35 GW of installed power capacity.

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ISOTeam

Tough FY17, a Better Year Ahead

ISOTeam endured a tough FY17, hit by one-off impairments, delayed revenue recognition for some of its projects and lower R&R projects. However, management has ventured into a few new projects to enable it to grow further, such as the recently announced SG Bike and cockroach spray. We expect a better FY18F ahead as we expect the company to win more new contracts in the near term and with a recovering property outlook, as well as contributions from its Solar and Myanmar projects. Maintain BUY with an unchanged DCF-based TP of SGD0.50 (43% upside).

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