| UOB KAYHIAN | CIMB |
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Banking – Singapore Monthly Statistics: Nov 17 – Consumer Loans Catch Up With Business Loans
Loans to businesses maintained robust growth of 8.8% yoy while consumer loans picked up by 0.8ppt mom to 4.6% yoy in Nov 17. Three-month SIBOR surged by 26bp to 1.46% in Dec 17, which augurs well for NIM expansion in 2018. Our top picks are OCBC, followed by DBS. Maintain OVERWEIGHT.
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Offshore & Marine Brazilian Grinch
■ Keppel will pay US$422m (S$570m) to settle bribery allegations in the US, Brazil and Singapore and treat it as an exceptional item before FY17 dividend consideration. ■ The bribery allegations involved 13 contracts that were awarded in Brazil since 2001, including the six semi-submersibles to Sete Brasil worth c.S$6.2bn in 2012. ■ KEP’s share price could weaken in the near term, as it has been dismissing the bribery allegations. Final dividend will be based on profit before penalty. ■ SMM was also named by a Petrobras executive along with KEP in the Petrobras bribery scheme. However, SMM has yet to make an announcement. ■ Maintain OW on the sector but expect some near-term selling pressure for the two stocks. The return of non-drilling orders could still be the key catalyst.
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| OCBC | DBS |
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YOMA STRATEGIC HOLDINGS | HOLD STREAMLINING PROCESS IN MOTION
Memories Group Ltd to become associate Global players to construct two major projects In-line with strategic priorities Yoma has completed the proposed sale of its tourism related businesses on 26 Dec through a RTO of SHC Capital Asia Limited, now renamed as Memories Group Limited (Memories). Approximately 167.1m new consolidated shares have been allotted and issued by Memories to Yoma at S$0.263 per share as consideration shares, which represent 54.1% in the enlarged issued and paid-up share capital of Memories. Following the proposed compliance placement which will be taken by Memories, the latter will become an associated company of Yoma. Separately in end-Nov 2017, Yoma announced that it has signed an agreement with Bouygues Construction and Taisei Corporation for the construction of Yoma Central and The Peninsula Yangon. We are encouraged by the involvement of two global construction companies, as the hotel and residences in the two projects have been designed with an element of luxury in mind. In our view, the two latest announcements continue to be aligned with management’s intention of growing its core businesses (Yoma Food, Motor and Land) and streamlining its non-core operations. We maintain our rating and our fair value estimate of S$0.55.
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CITIC Envirotech Ltd (CEL SP) : HOLD Share placement at a premium
• Share placement of 83.2m new shares at 14.8% premium • New shareholder helps broaden financing channels • Net debt to equity ratio remains in the single digit • Maintain HOLD with TP unchanged at S$0.80
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| MAYBANK KIM ENG | |
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Singapore Retail REITs In Need Of Retail Therapy Initiate with NEGATIVE; top pick FCT
Singapore’s retail REITs are enjoying a cyclical recovery from a rebound in tourism and a more constructive economic landscape. But rising rates, peak new supply in 2018 and fair valuations should restrain near-term price upside. Structural challenges look daunting; sales leakages from outbound travel persists, while online penetration at 4.6% of retail sales could potentially climb to 10-20%. Sales psm of retail space have already eroded 6% over three years, with long-term organic growth rates for retail REITs lacking visibility. We initiate the sector with a NEGATIVE rating. FCT is our top pick. We have SELLs on MCT and SGREIT.
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Check out our compilation of Target Prices
