ANALYSTS SAY: Buy, Sell, Hold (7 June '18)

MAYBANK KIM ENG

KSH Holdings (KSHH SP) Performance At Upcoming Sales Launches Is Key

KSH’s 4QFY18 results came in above expectation with full-year profit exceeding our forecast by 19.1%. Despite the fall in revenue, construction margins expanded. Singapore’s outlook generally looks positive, so performance at the upcoming launches should be a catalyst. Also, the Gaobeidian project should see progress by Sep 18 although selling prices are lower. Maintain BUY with an SOTP-based target price of S$1.04.

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Sasseur REIT (SASSR SP) Premium Buy in China’s Discount Malls Initiate coverage with BUY

Sasseur REIT’s portfolio of four outlet mall properties in China’s fastgrowing Tier-2 cities of Chongqing, Hefei and Kunming arguably offers a unique and compelling investment proposition. It (1) captures one of China’s most important consumer trends – ‘premiumisation’, (2) is a frontrunner in China’s fastest-growing retail format, (3) has downside protection to its distributions with minimum rental guarantees till FY19 while the embedded 10-plus-10-year entrusted management agreements (EMAs) enjoy growth upside from sales-based leases, and (4) has a visible sponsor-led acquisition growth pipeline. Initiate at BUY to our SGD0.90 DDM-based TP (WACC: 10.7%, LTG: 3.0%).

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Hutchison Port Holdings Trust: Scary waters, hidden treasure

Hutchison Port Holdings Trust: Scary waters, hidden treasureAfter we re-iterated our BUY call on HPHT on 1 Jun, the stock has been up 10.9% in less than a week and up 7.0% yesterday alone. Yet HPHT is still down 26.5% YTD mainly due to three main factors: 1) NDRC reference tariff cut 2) US-China trade tensions and 3) MSCI exclusion. We see little impact operationally for the first two factors and no change in company fundamentals following the third. We do recognize that government-related actions remain highly unpredictable and our cost of equity increases to 10.0%. Our fair value decreases from US$0.43 to US$0.375 as a result. Despite this, we see significant value at current prices. As at 6 Jun’s close, there is a 22.4% upside to our fair value with an 8.8% FY18F yield. Re-iterate BUY.

Singapore Coal Monthly

More cooling attempts from China

SINGAPORE | MINING | SECTOR UPDATE

What is the news? China In May-18, National Development and Reform Commission (NDRC) announced new measures to curb coal price, aiming to bring coal prices back to the reasonable range. The 9 key measures are listed as followed: 1) Ramp up production by at least 300k tonnes/day from mines in Shanxi, Shaanxi and Inner Mongolia. 2) Gradually introduce 100mn tonnes of quality capacity 3) Improve rail capacity. 4) Probe in the execution of medium- and long-term coal supply contracts. 5) Increase power supply from the sources of renewable energy. 6) Adjust coal inventories to ensure 100mn tonnes of available coal stock. 7) Reinforce supervision and regulation on heavy coal-consuming enterprises. 8) Crack down hoarding and speculation in the coal market. 9) Encourage joint operations between coal and power enterprises.

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