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CGS CIMB

UOB KAYHIAN

Singapore Press Holdings

Sleeping beauty awakens

 

■ Media’s structural weakness is largely priced in; we see a possible re-rating from earnings recovery, successful diversification and higher-than-expected dividends.

■ We upgrade SPH to Add with higher FY19-20F EPS and TP of S$2.85. Further upside could stem from media stabilising and higher asset management income.

■ Management is seeking new income source in overseas property asset management, for which we forecast 8% cash-on-cash returns, on average.

■ We expect the upcoming property sales launch to boost FY19-20F earnings by S$8m11m, based on an estimated ASP of S$1,850 psf.

■ The 3QFY18 results are due to be released on 11 Jul. We forecast that core PATMI (S$52m-57m) will be stronger qoq (on seasonality) but lower yoy by 14-20%.

 

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Venture Corporation (VMS SP)

Event Horizon; Downgrade To HOLD.

 

VMS’ stellar 2017 was driven by IQOS. Our deep dive into the supply chain has revealed reasonable evidence to suggest a revenue contribution of 25% and gross profit contribution of 40% from the device. With IQOS production slowing down and shifting away to its competitor, VMS’ earnings are at risk of declining in 2018 and beyond. Growth and margins are expected to normalise and we cut earnings forecasts by 16-34% for 2018-20. Downgrade to HOLD, with a lower target price of S$18.20. Entry price: S$14.00.

 

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MAYBANK KIM ENG OCBC

Mapletree Industrial Trust (MINT SP)

Hi-Tech Momentum

 

Buying opportunity after pull-back; DPU fine-tuned

MINT’s shares have pulled back along with the broader market and in partial response to rising interest rates. Still, we believe fundamentals are intact, backed by stronger leasing demand and a more resilient portfolio following its hi-tech asset investments and US diversification in 4Q 2017. We also believe low gearing, debt headroom of SGD700m and clear acquisition-growth potential can provide upside to our 3-year 6.3% DPU CAGR forecast. Following the release of its annual report, we adjust our DPU for the latest asset-level details and revenue updates. We also incorporate the finalisation of MINT’s 7 Tai Seng Drive acquisition on 27 Jun. Our DDM-based TP remains at SGD2.25 (WACC 7.2%, LTG 1.5%). BUY.

 

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ST Engineering: A quality stock to accumulate

 

Singapore Technologies Engineering (STE) recently announced the divestment of 25% equity interest in its indirect associate, Airbus Helicopters SE Asia Pte Ltd (AHSA) to its JV partner, Airbus Helicopters SAS for ~S$14m. In May, the group also streamlined entities in its electronics arm as part of the group’s ongoing business review. We like STE with its strong order book which provides visibility, as well as its diversified operations. In FY17, Aerospace contributed 51% of group pre-tax profit, followed by Electronics at 34%, Land Systems at 14%, and Marine & Others at 1%. The share price has corrected by about 12% from its peak of S$3.70 in mid Apr and the stock now has a forecasted dividend yield of about 4.7%. In at least the past five years, the group has been paying out full year dividends of S$0.15/share; from FY13-FY16 a portion of this was paid as a “special dividend”. From FY17, the group classified this as part of the “final dividend”, illustrating the group’s confidence in its cash flows and dividend sustainability. Maintain BUY but lower our FV from S$4.00 to S$3.90.

 

 

DBS VICKERS

Frasers Logistics & Industrial Trust (FLT SP) : BUY

Divests property at 40% premium to book value

 

• Sale of 80 Hartley Street for A$90.5m, c.40% premium above book value

• Significant premium above book achieved; proceeds could be deployed to other uses or paid to shareholders

• NAV increased slightly by 1sct post sale

 

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LionelLim8.16Check out our compilation of Target Prices




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