ANALYSTS SAY: Buy, Sell, Hold (11 Apr '18)

Singapore Press Holdings (SPH SP)

2QFY18: Finding An Earnings Floor; Upgrade To HOLD

SPH reported in-line 1HFY18 core net profit of S$90m, forming 43%/41% of UOBKH/consensus estimates. Display advertising revenue decline was smaller than implied by our page counts, suggesting that the aforementioned pick-up in retail ad spending is gathering pace. Media earnings decline might be near a floor and the current 5.2% forward dividend yield should provide share price support. Upgrade to HOLD and tweak our target price to S$2.41. Entry price: S$2.30.

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Genting Singapore (GENS SP)

Stay in the game

Reiterate BUY and SGD1.46 TP

Since GENS reported 4Q17 EBITDA fell 20% QoQ, its share price has tumbled 14%. Adjusting for normal VIP win rate and non-recurring items, 4Q17 EBITDA would have been 11% higher and a comfortable 24% of our FY18 forecast. In our view, all signals point to the VIP and mass markets improving going forward and GENS’ current share price is unjustified as it implies ‘crisis’ valuations. Our unchanged SGD1.46 TP is based on 12x FY18 EV/EBITDA, in-line with the 9-year 12M forward EV/EBITDA mean.

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Oil & Gas sector: Brent hits highest intraday since Dec 2014

Last night Brent crude extended its gains to reach US$71.34/bbl, the highest intraday level since Dec 2014, aided by 1) geopolitical tensions in the Middle East, 2) reports that Saudi Arabian officials were seeking US$80/bbl on Brent ahead of the Aramco IPO, and 3) comments by Chinese President Xi which tempered recent trade tensions between the US and China. The positive oil price movement should support oil and gas related stocks in the near term, but what would buttress valuations in the longer term are sustained new order flows with decent margins. Based on Bloomberg consensus, the street is forecasting US$65/bbl for Brent for 4Q18 and US$61/bbl for WTI. The stock of Sembcorp Marine [HOLD, FV: S$2.07] is more sensitive to movements in oil prices due to its pure play status, though investors looking to trade are advised to be nimble. For less aggressive investors, Keppel Corp [BUY, FV: S$9.45] is a safer bet due to its diversified earnings base and less demanding valuations. SMM’s earnings will be released on 25 Apr while KEP’s release is on 19 Apr.

Excelpoint Technology Ltd

More than 30 years of experience

■ EBN recognised Excelpoint as one of the top 25 global electronics distributors in 2017.

■ None of Excelpoint’s customers accounted for more than 10% of its FY17 revenue.

■ FY17 revenue grew 16%, while net profit growth was 14.8% yoy.

■ The company is positive on its earnings outlook, given the growth potential for the Internet of Things.

■ Excelpoint trades at FY17 P/E of 7.7x, P.BV of 0.85x. FY17 dividend yield is 6.47%.

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