| UOB KAYHIAN |
UOB KAYHIAN |
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Sembcorp Industries (SCI SP) 2Q18: India Delivers Surprise Profit, Potentially On Track For Profit In 2018
SCI’s 2Q18 core earnings disappointed at the group level, but was in line at the utilities level The India business reported a surprise profit, largely due to a one-off client recovery. Higher spot price exposure in 2H18 could see continuation of better profitability for India. India could report a small profit against our breakeven base case. Earnings for 2018-20 fell 5-13% largely on the marine business. Target price was lowered to S$3.41 on lower SMM target price. Maintain BUY.
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Genting Singapore (GENS SP) 2Q18: VIP Volume Growth Remained Strong But Mass Market Was Weaker
GENS’ 2Q18 results were within expectations. VIP volume growth remained strong but this was offset by a low VIP win rate and soft mass market. We expect GENS’ valuation to trend up over time on the development of its Japan IR bidding, given its good winning changes backed, its experience in operating in a highly-regulated casino environment and track record in contributing to the country’s tourism. Maintain BUY. Target price: S$1.38.
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| OCBC | MAYBANK KIM ENG |
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UOB: Good company, bad trade situation
UOB delivered 2Q18 net earnings of S$1077m, +28% YoY and +10% QoQ, and better than the street’s estimate of S$976m. Management has declared an interim dividend of 50 cents (versus 35 cents in 2Q17). Together with the 2Q results, UOB also announced that it is launching its Digital Bank which aims to build a customer base of 3-5m in the next 5 years operating at a steady state cost-to-income ratio of 35%. Management is guiding for high single-digit loans growth, and higher rates ahead will be positive for NIM and management is expecting NIM to hold at current level (1.83%) or higher. NPL ratio is likely to stay stable at around 1.7%. We have fine-tuned our earnings estimates for FY18, raising it marginally from S$4007m to S$4030m. Our fair value estimate moves up from S$31.02 to S$32.09. BUY
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UOL Group Ltd (UOL SP) Well-Positioned to Weather the Storm
Maintain BUY; Top sector pick While 1H18 EBIT of SGD310m made up just 33% of our full-year estimate, we expect stronger development earnings in 2H18 will help achieve our forecast. With competitive land costs and manageable inventory levels, we believe UOL is well-positioned to weather the residential headwinds. Asset enhancements for its commercial properties are medium-term value drivers. We lower our RNAV by 1% to SGD11.75 to reflect the latest market value of its stake in UIC. Consequently, we trim our TP 2% to SGD8.80 based on an unchanged RNAV discount of 25%. Maintain BUY.
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CGS CIMB |
CGS CIMB |
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Venture Corporation Concerns over growth in FY18 allayed
■ 2Q18 earnings came in above our expectations at 25% of full-year forecast. 1H18 formed 47% of our FY18F. ■ Despite the sales decline of 6% yoy in 2Q18, Venture executed well as a group in improving cost efficiencies, leading to net profit margin of 10.3%. ■ An interim DPS of S$0.20 was declared. ■ 2Q18 effective tax rate was lower at 15.0% versus 17.3% in 2Q17. ■ We maintain Hold with TP of S$17.83.
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Lippo Malls Indonesia Retail Trust Higher cost and taxes continue to drag
■ 2Q/1H18 DPU of 0.59 Scts/1.26 Scts makes up 23%/48% of our FY18 forecast. ■ The lower 2Q NPI margin of 82% was due to higher operating and other expenses. ■ Rental reversions continue to average a positive 4.2% in 2Q. ■ Gearing of 36% provides some debt headroom for new acquisitions. ■ We upgrade LMRT from Reduce to Hold on valuation with an unchanged TP of S$0.33.
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