ANALYSTS SAY: Buy, Sell, Hold (2 Mar '18)

Yangzijiang Shipbuilding: Tough operating environment

Yangzijiang Shipbuilding reported a 15% YoY rise in revenue to RMB6.4b and a 12% increase in net profit to RMB678m in 4Q17, bringing full year net profit to RMB2.9b, accounting for 93% and 123% of ours and the street’s full year estimates, respectively. The group took RMB1.2b of allowances for expected losses on construction contracts with the stronger RMB and higher raw material costs such as steel. A dividend of 4.5 S cents has been declared, compared to 4.0 S cents a year ago. Looking ahead, the group plans to 1) further develop its LNG carrier capabilities, 2) capitalise on a consolidating market, and 3) invest in infrastructure and environment protection. Given the still tough operating environment for the shipbuilding business, we lower our P/B for this segment to 0.9x and our SOTP-based fair value estimate drops to S$1.49. Maintain HOLD.

AEM Holdings Ltd

Multiple growth drivers

■ FY17 net profit was 6% above our forecast.

■ AEM declared a final DPS of 6.5 Scts and proposed a 3-for-1 bonus issue.

■ FY18 guidance of S$255m for revenue and S$42m for pre-tax profit is maintained. We see room for AEM to up its guidance as the year progresses.

■ Based on our higher FY19F estimates (as we introduce consumable revenue), our new TP is S$8.19 based on an unchanged 10x CY19F earnings.

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Alpha Picks: A Challenging February But Look Ahead

Reflation and cyclical recovery take a hit but staying the course. We selectively tweak our portfolio, but maintain exposure to large caps with a bent into asset inflation and reasonable dividend yield.

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China Everbright Water (CEWL SP) : BUY

Strong balance sheet to support growth

 FY17 results ahead of our expectation due to strong construction revenue

 Construction works of three sizeable water environmental projects to support FY18 growth

 Solid balance sheet allows more project wins in the PPP market

 Maintain BUY with TP of S$0.65

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MAYBANK KIM ENG

Singapore Medical Group (SMG SP)

Dragged by start-up costs

Earnings missed due to upfront costs for expansion

FY17 net profit missed our estimate by 11%, due to professional fees for M&As and start-up costs for two sizeable clinics, in Paragon and Novena Medical Hub, estimated to be c.SGD1m. Nonetheless, FY17 earnings surged 251% and the topline grew 64% YoY, mainly from 3 new acquisitions. Three growth drivers in FY18 include: 1) acquisition of SW1 Clinic with earnings potential of SGD1-2m; 2) organic expansion in Singapore via two new diagnostic centres and two new doctors; and 3) growing overseas businesses. Our TP fell 10% to SGD0.70 after factoring in: 1) 5% EPS dilution from a rights issue; 2) 1.3% EPS dilution from new share issuance for SW1 acquisition; and 3) 2% EPS cut for FY18E for expansion costs (FY19 also reduced 2%). Our TP remains 27x FY18E EPS (average of 2-year forward mean of small-cap healthcare peers in Singapore). Maintain BUY.

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