ANALYSTS SAY: Buy, Sell, Hold (31 Jan '18)

Singapore Airlines (SIA SP)

3QFY18 Results Preview: Expect Core Earnings To Rise 27% yoy, Underpinned By Strong Performances From Parent Airline And Cargo

SIA will report 3QFY18 results on 13 February. We estimate net profit to rise 74% yoy on the back of stronger load factors for the group. Cargo operation is expected to generate the highest profit in 10 years. However, its airline subsidiaries are expected to generate lower earnings on weak pricing power amid higher fuel prices. Maintain BUY. Target price: S$11.90.

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Micro-Mechanics (Holdings) Ltd

Record quarter but a deceleration in momentum

SINGAPORE | TECHNOLOGY | 2Q18 RESULTS

 2Q18 revenue and PATMI were below expectation. We are reducing our earnings forecast by 7% for FY18e.

 The weak USD partly hurt top-line momentum in the 2Q18.

 As our target price is unchanged at S$2.50 and the share price is up 18% since our last report, we are downgrading our recommendation to ACCUMULATE.

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OUE Hospitality Trust

4Q17: can we extend the check-out time please?

■ FY17 DPU of 5.14 Scts (+11.5% yoy) was in line with consensus and our expectations at 102% of our full-year estimate. 4Q17 DPU of 1.27 Scts (-6.6% yoy) was at 25%.

■ We are heartened by MOS registering its third consecutive quarter of yoy RevPAR improvement. We expect MOS to achieve 5% gain in RevPAR to S$235 for FY18F.

■ CPCA continues to clock up strong operational performance, with RevPAR improving 32% yoy to S$176. We forecast CPCA to earn above the minimum rent in FY18F.

■ What was also a positive surprise to us was the 3.8% positive rental reversion at MG. We believe that average expiring rents are, at last, converging with market rents.

■ Reiterate Add with a higher DDM-based TP. Downside risks could include a slowerthan-expected recovery in Singapore hotels and unfavourable acquisitions.

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City Developments Limited:

Submitted top bids for two land parcels

According to a media release by URA, City Developments Limited (CDL) had submitted the top bids for two land parcels at Handy Road and West Coast Vale. Both residential sites were offered for sale on 99-year lease terms. CDL’s bid came in at S$1,722 psf ppr for the Handy Road site (total 10 bidders) and S$800 psf ppr for the West Coast Vale site (total six bidders). This was 12.3% and 0.7% higher than the second highest bidder for each of the projects, respectively. We estimate breakeven ASPs of ~S$2,250 psf for the Handy Road project and ~S$1,200 psf for the West Coast Vale project. Selling ASPs would likely have to come in above S$2,500 psf for the former and S$1,400 psf for the latter. Sophia Hill, which is located near to the Handy Road site, sold 6 units YTD at an average price of S$2,058 psf. CDL’s active participation in the land tenders does not surprise us, underpinned by the recovery in the Singapore residential market. A decision on the award of the tenders will be made known by URA at a later date. We maintain our BUY rating and S$15.30 fair value estimate on CDL given its strong land bank position in Singapore.

DBS VICKERS 

Industrial REITs

Size really matters!

• A giant awakes in the industrial mid-cap space

• Short the acquirer, long the acquired? Not this time

• Size matters as the combined entity could see further re-rating on “liquidity“ premium

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