ANALYSTS SAY: Buy, Sell, Hold (28 Feb '18)

Golden Agri-Resources

Plans to increase replanting could stifle growth

■ FY17 core net profit came in below expectations, accounting for only 70% of our and 60% of Bloomberg consensus full-year net profit forecasts.

■ The weaker-than-expected results were mainly due to lower FFB production. FFB production only increased by 8% yoy vs. our projection of 15%.

■ 4Q17 EBITDA fell 13% yoy due to lower FFB production (-27% yoy).

■ We cut our FY18-19 EPS forecasts by 13-15% to reflect lower plantation earnings.

■ Maintain Reduce with a lower target price of S$0.31 (15x FY19F P/E).

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UOL Group Ltd (UOL SP)

Bulking up from UIC consolidation

Maintain BUY on higher TP of SGD10.40

UOL reported 4Q17 results with underlying property performance inline. The increase in DPS to 17.5cts was a positive surprise. In the absence of major acquisitions, we see scope for further capital management. We rejig our model to build in the consolidation of UIC and see a revenue surge in 2018. We raise RNAV to SGD11.55 (from SGD10.95) after incorporating the latest data points and rolling forward our valuation basis to 2018E. Our TP is lifted 6% to SGD10.40, based on an unchanged RNAV discount of 10%. UOL remains our top large-cap pick amongst Singapore developers. Maintain BUY.

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CNMC Goldmine Holdings Limited

Look forward to a turnaround this year

SINGAPORE | MINING | 4Q17 RESULTS

 Revenue was in line with our expectation. Net profit outperformed our expectation due mainly to the unexpected downward adjustment of compensation for employees and key management.

 TheTrial run of CIL plant showed a satisfactory result.

 The company is proceeding with the exploration of all projects in hand.

 We revise down FY18e EPS to 1.5 US cents (previous 2 US cents) as the full production from CIL plant may only start in 2Q18. Meanwhile, it is expected a further improvement of output in FY19. Accordingly, we upgrade our recommendation to ACCUMULATE with an unchanged target price of S$0.3 due to the recent price correction.

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CITIC Envirotech (CEL SP)

2017: Positive Results But Profits From Lanzhou Mega Project Only From 1Q18

CEL delivered positive 2017 results with a 24.9% increase in net profit. CEL results were better than street estimates but lower than ours as we had included earnings from the Lanzhou mega project. However, recognition will now only start from 1Q18. Institutional investors remain committed to share placement at a premium. Opportunities for CEL continue to abound in China and beyond as it utilises its tech advantage. Maintain BUY but trim our DCF-based target price to S$1.06

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OCBC SECURITIES

Hotel Properties Limited: Blockbuster set of results

 Neglected proxy to hospitality up-cycle

 Undemanding valuations
 FV at S$4.74

FY17 core PATMI increased 52.8% YoY
FY17 revenue increased 14.1% YoY to S$659.2m, mainly attributable to the sale of Tomlinson Heights units as well as better performance from the group’s hospitality segment. Correspondingly, gross profit increased 19.8% YoY to S$169.6m. Share of results of associates and jointly controlled entities increased from S$34.7m in FY16 to S$128.9m in FY17, mainly due to profits from the Burlington Gate and Holland Park Villas in London which completed development this year.

The increase in gross profit as well as the contributions from associates and JVs translated into a 52.8% higher core PATMI of S$161.7m. HPL declared 4 S cents for its first and final dividend, and an additional 6 S cents for a special dividend. This translates to an FY17 dividend yield of 2.7% against yesterday’s closing price of S$3.74. As of end-FY17, the group’s NAV stands at S$3.71 per ordinary share, up from S$3.45 as at end-FY16.

Positive operational outlook for both segments
We believe Singapore is at the early stage of a rebound in the domestic hospitality market and see the pick-up in global economic growth as a boon for luxury hotels and resorts around the world. We see HPL as a proxy to these growth drivers with its sizeable hotel portfolio.

The group’s hospitality assets, captured under PPE in the balance sheet, are valued at a blended cap rate of ~5.4%, which we continue to find attractive given that a substantial portion of the assets are either freehold or long leasehold. For the property segment, we look forward to contributions from the sale of remaining units at Burlington Gate and Holland Park Villas, which the group has a 65% and 50% interest in, respectively.

With a change in covering analyst, our fair value decreases 3% from S$4.83 to S$4.74 as we update our model. HPL is currently trading at a ~20% discount to our RNAV, which we find undemanding relative to its hospitality peers. We maintain BUY on HPL.