ANALYSTS SAY: Buy, Sell, Hold (12 June '18)

CIMB

Telecommunications – Singapore

The Catch Phrase Is “Free”

Competition has intensified even before TPG launches its mobile services on a commercial basis. TPG promises to offer senior citizens aged 65 and above 3GB of data and unlimited local calls free for the first 24 months. Circles.Life has also launched its new Flexi Plan which provides 1GB of data and 30 minutes of local talk time for free. Maintain MARKET WEIGHT. BUY Singtel for its defensive qualities. Upgrade StarHub to HOLD as valuation premium has vanished and, in fact, reversed slightly.

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ISOTeam Ltd

Shaping Singapore’s landscape

■ Operates in building maintenance and estate upgrading industry.

■ ISOTeam sees itself as a potential beneficiary of refurbishment initiatives, improved property sentiment and national push towards greener environment.

■ Has market leadership in both R&R and A&A public sector, but also diversifying into private sector, other regional markets and commercialising green solutions.

■ Current S$133m order book is highest to date; management expects stronger 4QFY18F from bigger projects and potential one-off gains.

■ Based on Bloomberg consensus, the stock currently trades at 10x 12M forward P/E and offers 2% dividend yield.

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Singapore Office

Paya Lebar Quarter close to 80% pre-committed

• Great Eastern, NTUC Income, and IWG reported to be leasing c.232k square feet of space at Paya Lebar Quarter (PLQ)

• High pre-commitment level at PLQ underlines multiyear upturn in the Singapore office market

• Maintain Overweight call on office REITs

• Top picks: CapitaLand Commercial Trust (BUY, TP S$2.10) and Suntec REIT (BUY, TP S$2.30)

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 YANGZIJIANG SHIPBUILDING | BUY

After gaining about 80% in 2017, the share price of Yangzijiang Shipbuilding (YZJ) has dropped by 34% YTD, and has given up much of its 2017 share price gains. During its recent low in end May, the group undertook a share buyback (5m shares at S$0.90-S$0.915/share), and stated that it is ready to conduct an ongoing share buyback exercise on price weakness with its strong cash position. A market concern previously was the lack of new order flows. However, we see that the group continues to secure contracts, announcing nine effective orders on 4 Jun that are worth US$578m, bringing YTD orders to US$846m. Though margins are understandably pressured with intense competition in the industry, we have already factored this in our estimates. With the group’s strong execution abilities, net cash position of RMB1.7b and positive operating cash flows in the past four years, YZJ has delivered a commendable performance compared to its peers. We update our sum-of-parts valuation and our FV estimate slips from S$1.22 to S$1.18. But with the share price fall, we see more palatable valuations and upgrade our rating to BUY. At the current price level, YZJ’s stock is trading at about 7.5x blended FY18/19F earnings and 0.6x forward P/B.