ANALYSTS SAY: Buy, Sell, Hold (7 Sept 2017)

Best World International Ltd

Still pursuing its Chinese dreams

■ We hosted Best World’s (BW) management for an NDR in Hong Kong on 5 Sep.

■ Key investor questions focused on: 1) the impact of the China government’s “pyramid scheme” campaign on BW’s business, and 2) its latest expansionary developments.

■ Management stated that there was no noticeable slowdown in consumer sentiment post “pyramid scheme” campaign. Conversion to direct selling model is still underway.

■ New manufacturing plant enhances inventory management and avails BW to halal opportunities post FY18F.

■ This report marks a switch in analyst coverage on BW but we maintain our Add call.

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StarHub (STH SP)

Key Takeaways From Sell-side Day

StarHub showcased its capabilities in Fixed Enterprise through its Sell-side Day held on 6 Sep 17. It reaches out to SME customers through the Go Digital initiative and adds value by providing data analytics. The revamped leadership and acquisition of Accel Systems & Technologies would strengthen growth at Fixed Enterprise Group.

Maintain HOLD. Target price: S$2.62. Entry price: S$2.38.

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Sheng Siong Group: Evolving grocery landscape

With the entrance of Amazon into the local grocery category, this inevitably caused further concerns for local retailers. While the traditional brick and mortar model for supermarkets is relatively stable for now, having an online platform is an increasingly important avenue for growth ahead.

CEO Lim Hock CheeMajor supermarket players do have some form of an online platform, but are still optimizing their systems to avoid risk of margin erosion and undesirable ROI.

On the other hand, e-commerce players are considering the addition of retail stores to complement them, such as Amazon’s latest acquisition of Whole Foods Market. Meanwhile, SSG will focus on their fresh business as well as on-going cost management initiatives. Notwithstanding the risk of price wars, and keeping in mind existing opportunities for new stores, we have a BUY on the stock with fair value of S$1.04.