| UOB KAYHIAN | CIMB |
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Property − Singapore The Next Wave
We foresee the nascent recovery spreading to the mid-range and high-end segments in the next wave, driven by replacement demand from enblocers and a pick-up homebuying interest from foreigners. We expect Singapore property prices to rise by 5-10% next year after bottoming out this year. Our top picks are Wing Tai, GuocoLand and Wheelock.
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Raffles Medical Group Upgrading ward
■ RFMD’s share price has corrected c.27% YTD, we now think it looks more attractive in terms of risk-reward. Upgrade from Reduce to Add with SOP-based TP of S$1.21. ■ At the current price, we believe the Singapore operations have been priced in with little value ascribed to the long-term potential of its China hospitals. ■ Our best-case scenario for both Singapore and China suggests a S$1.49 TP with 35% upside, while we think the worst-case scenario is unlikely to materialise. ■ Growing pains for new hospitals in China are inevitable, but a home-field advantage could help to offset near-term overseas weakness.
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| OCBC | |
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SATS Ltd: Weak yields put pressure on margins
With encouraging visitor arrivals to Singapore and strong traffic statistics at Changi Airport for the period Jan-Jul 17, we believe SATS Ltd (SATS) will benefit as a provider of gateway services (GS) and food solutions (FS) for close to 80% of Changi Airport’s traffic throughput. That said, passenger yields remain weak for the airline industry, which translates to pressure on SATS’ margins as its airline customers will likely engage in cost management efforts, especially for its low cost carrier customers. In addition, the changes Qantas will be making to its collaboration with Emirates will add capacity at Changi Airport and we expect these changes to be positive for traffic growth at Changi Airport. Hence, if SATS does secure FS and GS contracts from Qantas, it may further provide a lift to its earnings. All considered, we prefer to wait for its 2QFY18 results for clarity over its margins and keep our forecasts unchanged. Maintain HOLD on SATS with a S$5.05 FV, but would look to re-engage below S$4.70.
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Check out our compilation of Target Prices
