CIMB |
UOB KayHian |
Yangzijiang Shipbuilding
Using other people’s money to make money
■ YZJ is placing out 137m new ordinary shares of the company to institutional investors at S$1.53 per share, raising approximately S$209m.
■ The placement price implies 1.18x FY17 P/BV. This is a surprise as the company had a strong balance sheet with net cash of Rmb304m as of 1H17.
■ We believe proceeds will be used to acquire the other 20% stake in Xinfu shipyard, LNG technology M&As and participate in private capital investment in China.
■ We are positive on the placement as dilution is minimal at 3.6% with the benefit of increasing institutional shareholders’ following.
■ Maintain Add and target price, still based on SOP but pegging 1x P/BV to HTM assets and 1.4x P/BV to shipbuilding.
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Cityneon Holdings (CITN SP)
A New Chapter, A New IP And The Next Stage Of Growth
Cityneon has made a significant acquisition, adding the Jurassic Park intellectual property to its portfolio of esteemed names. This represents an acquisition of a fantastic business at a bargain multiple of only 5x earnings with a profit target. The recent dip in share price post the news of the acquisition announcement opens an opportunity for investors to acquire shares at only a 10% premium to Lucrum 1’s cost of S$0.90. Maintain BUY with a higher target price of S$1.50.
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OCBC |
Frasers Commercial Trust: Positive indications in Australia and Singapore
Tailwinds in the CBD office segment in select Australian cities should prove beneficial to Frasers Commercial Trust’s (FCOT) portfolio assets. In Melbourne, favourable demand-supply dynamics in the CBD should see vacancy rates fall below 4.5% in 2H19 while effective rents should improve over 2018. In Perth, the CBD office market appears to be bottoming, with improved net absorption being observed. Separately, we are encouraged by certain developments that could provide support to HP’s footprint in Singapore. HP Inc. has announced the commercial availability of the HP Jet Fusion 3D Printing Solution and expansion of the HP Partner First 3D Printing Specialization programme for Asia-Pacific countries. While rationalisation of space is possible, we deem it unlikely that HP will relocate their existing operations in Singapore entirely to the new build-to-suit project at Telok Blangah. Still, we believe that the uncertainty of HP’s lease expiries at Alexandra Technopark will continue to weigh on FCOT’s share price performance. We maintain our HOLD rating with an unchanged fair value of S$1.42.
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Check out our compilation of Target Prices