ANALYSTS SAY: Buy, Sell, Hold (20 Feb '18)

Singapore Strategy

Singapore Budget 2018

■ We think the Singapore Budget 2018 is an extension of the themes from previous budgets, which are mainly to save and invest for the country’s future.

■ More details on the Budget will be elaborated by our economist, Michelle Chia.

■ On equity, we see some impact on property, healthcare, construction, and REITS.

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ISDN Holdings (ISDN SP)

4Q17 Results Preview: To Be Positively In Line With Expectations

We expect ISDN’s results to be in line with our expectations as China and its manufacturing sector make a strong showing in 4Q17 (Singapore follows suit). We also note the robust performance of key customers such as AEM and MIT. ISDN’s venture into renewables is showing progress in R&D through strategic cooperation, but currently has yet to bear fruit, and as such we do not take this into account. Maintain BUY with an unchanged PE-based target price of S$0.35.

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Singapore O&G Ltd.

Strong finish to 2017

SINGAPORE | HEALTHCARE | FY17 RESULTS

 FY17 Revenue and PATMI were in line with our full year estimations

 Solid result from O&G amidst challenging business environment, and stellar performance from Cancer-related segment

 Declared final dividend of 0.89 SCents per share (FY17 total dividend of 1.50 SCents)

 Maintained ACCUMULATE at a lower TP of S$0.42 (previously S$0.62)

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Singapore Energy: Gradual rise in carbon tax; higher foreign worker levy deferred

The government has also announced a new carbon tax of S$5/ton from 2019-2023, which will be raised to S$10-15/ton by 2030. This is a more gradual increase compared to what was explored and mulled over in last year’s Budget: S$10-20/ton from 2019. Sembcorp Industries [BUY; FV: S$3.95] emitted 15.4m tonnes of greenhouse gases (GHG) in 2016, compared to 6.9m tonnes in 2015 but we understand that the increase in 2016 is mainly attributable to the Indian assets that came on stream. SCI does not disclose its GHG emissions in Singapore, but based on a back-of-the-envelope calculation, we estimate less than S$15m impact on the bottom-line (based on $5/ton), which is less than 4% of the group’s net profit in 2016. There is also the possibility that some of the impact may be passed on to consumers. As for the Marine sector, the government will defer earlier-announced increases in foreign worker levy rates for another year ($300 instead of $350 for higher-skilled workers; $400 instead of S$500 for lower-skilled workers). 

DBS VICKERS 

Singapore REITs

Take the leap of faith

• Correction on interest rate fears largely done; stronger property fundamentals

• Attractive valuations with yield spreads and P/Bk now close to historical averages ahead of multi-year upturn

• Office and hotels remain our preferred sectors

• Top picks – AREIT, CCT, MLT, Suntec, CDREIT, FCT and FCOT

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