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CGS CIMB |
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Singapore Telecommunications (ST SP)
Recovery In Indonesia Continued Losses From India 35%-owned Telkomsel benefits from a recovery in pricing since late-June, which has become more broad-based over time. However, we expect the 40%-owned Bharti Airtel to incur the third consecutive quarter of losses due to intense competition from Reliance Jio’s Monsoon Hungama offer. Singtel intends to maintain ordinary dividends at 17.5 S cents for the next two financial years (FY19 and FY20), which provides a resilient dividend yield of 5.5%. Maintain BUY. Target price: S$3.94.
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Consumer Staples - Overall Ushering in ‘New Retail’
■ We visited honestbee’s new physical and experiential grocery and dining premise Habitat that illustrates the Online-to-Offline (O2O) phenomenon. ■ The automated check-out and collection process is a novel idea; and we believe Habitat may pose some competition for other online grocery players. ■ We stay Overweight on the consumer sector as this move by honestbee proves that physical retail is still relevant.
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| OCBC | RHB |
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Mapletree Logistics Trust: Stable like a log on calm waters Mapletree Logistics Trust (MLT) reported a healthy set of 2QFY19 results which met our expectations. DPU grew 3.8% YoY to 1.958 S cents. Operationally, MLT’s occupancy increased from 95.7% in 1QFY19 to 97.6%. Rental reversions were more moderate, coming in at 1.3% in 2QFY19, versus 2.0% in 1QFY19. Singapore now constitutes 33.0% of MLT’s property asset value (as at 30 Sep 2018), with Hong Kong coming in second at 30.4%. While there are concerns over the escalating trade tensions between U.S. and China, we note that China formed only 8.2% of MLT’s property asset value. Moreover, we believe a number of the assets are backed by strong underlying tenants such as JD.com and Cainiao Smart Logistics Network Limited, which offer exposure to the domestic e-commerce sector. Based on a closing price of S$1.23 on 22 Oct 2018, MLT is trading at a decent distribution yield of 6.5% for FY19F. Our fair value remains intact at S$1.37. Maintain BUY.
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Best World Put Your Skin In The Best Game; Initiate BUY
Initiate coverage with a BUY and Street-high SGD1.97 TP, 32% upside. Best World is one of the few local consumer firms that have successfully penetrated the Chinese market. As the group transited into a new business model in China at end-2Q18, it is now able to generate higher revenue and earnings for each product unit sold there. We expect earnings to jump at a CAGR of 21% over the next three years, which deems the current 10x FY19F P/E valuation as very compelling.
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