| UOB KAYHIAN | MAYBANK KIM ENG |
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ComfortDelGro Corporation (CD SP) Dividends Sustainable, Even Without Singapore Taxi Segment. Upgrade to BUY
We upgrade CD to BUY after its 17% ytd price decline that has priced in the disruption impacting its Singapore taxi operations. Even without the free cash flow from Singapore taxi operations, we estimate that CD can sustain its current DPS, which would imply a 2017-19 dividend yield of 4.7-4.9%. Potential catalysts include an accretive alliance with Uber and ridership growth from DTL3. Upgrade to BUY with a PE-based target of S$2.34 (previously S$2.37).
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GuocoLand (GUOL SP) Top Bidder for Beach Road site
Stronger case to establish a REIT platform; BUY GuocoLand and its parent Guoco Group (53 HK, Not Rated) submitted the top bid for the Beach Road commercial site. At SGD1,706 psf ppr, the bid is above consultants’ expectations and fairly aggressive, in our view. Nonetheless, this project should still be profitable and we estimate a surplus of SGD0.06 for GuocoLand’s 70% stake in the project. While it could lift net gearing to 1.0x by FY18E, we see no need for equity fund raising. Having said that, this new project has strengthened our case for a REIT platform. We keep our estimates unchanged pending award of the tender. Maintain BUY and RNAV-based TP of SGD2.75. Risk is a sharp fall in property prices.
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| DBS | |
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Singapore Property: Mixed fortunes for aspiring en bloc owners UOL acquires a third piece of land at Meyer Road; Florence Regency en bloc unsuccessful
UOL acquired a third land site through en bloc of freehold Nanak Mansions; inventory sitting on close to 1,000 new units Developers continue to be attracted to freehold sites with smaller bite-sized quantum Florence Regency en bloc appears to have failed as bids were below valuation
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Check out our compilation of Target Prices
