| CIMB | OCBC |
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Sin Heng Heavy Machinery Limited Management: markets remain challenging
■ Sin Heng has nearly five decades of experience in providing heavy lifting services to a diverse range of industries. ■ The company reported a net profit of S$1.2m in FY6/17 vs. a loss of S$4.1m in FY16. Sin Heng slipped into net loss of S$0.5m in 2QFY18 (Oct-Dec 2017). ■ As at end-Dec 2017, Sin Heng’s net gearing was 0.16x. ■ Sin Heng is trading a historical FY17 P/BV of 0.39 x vs. the local peer average of 0.43x.
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COMFORTDELGRO CORPORATION | BUY TAXI OPERATING ENVIRONMENT SEEMS TO BE STABILIZING - Encouraging operating indicators - Potential increase in fares ahead - PHC services may face more regulations In the recent few months up to Jan 18, we saw encouraging taxi operational indicators, which we view as positive for ComfortDelGro (CDG). Firstly, we noted three consecutive months and five consecutive months of YoY growth in industry average engaged mileage recorded for one-shift taxis and two-shift taxis, respectively. Secondly, we also noted that MoM growth in rental cars were more subdued while the rate of decline in taxi fleet size slowed down for the more significant taxi operators in Singapore. In our view, these indicators point to a more stabilized environment for the taxis and private-hire car (PHC) services. Separately, during the Singapore Budget 2018 debate, Ministry of Transport highlighted two points, which we believe are positive for CDG: 1) fares likely to rise moving forward, and, 2) regulations on the PHC services likely to increase. For now, one catalyst to look out for would be the pending regulatory approval of CDG’s alliance with Uber. Hence, on abovementioned reasons, we see more upside than downside to CDG’s outlook, and reiterate BUY on CDG with unchanged FV of S$2.25.
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| UOB KAYHIAN | RHB |
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Keppel Corporation (KEP SP) In Infrastructure We Trust
Keppel saw its energy infrastructure & services core earnings grow by 38% yoy in 2017, driven by higher electricity and gas sales, as well as contributions from Marina East. The business unit’s earnings are expected to expand by at least 10% in 2018 on greater contributions from EPC projects, in particular from the S$1.95b HK IWMF project. A successful bid for the Singapore IWMF in 2H19 will be a boost. Tweak 2018-20 earnings estimates by 1%. Maintain BUY with a lower target price of S$9.10.
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China Aviation Oil Singapore The Return Of Steady Earnings Growth
We came back positive from our recent meeting with CAO and feel more confident about the return of earnings growth in 2018. Growth would be aided by strong contribution from SPIA, supply of jet fuel into Chinese aviation traffic and a more rationalised approach on the trading business. We believe CAO’s dedicated M&A team could deliver earnings-accretive M&A during 2H18 or early 2019. We increase 2018-2019 earnings by 2-5% and upgrade CAO to BUY (from Neutral), with a higher SGD1.80 TP (from SGD1.60, 17% upside).
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