ANALYSTS SAY: Buy, Sell, Hold (11 Jan '19)

OCBC

Mapletree Logistics Trust (MLT SP)

Focus On Domestic Consumption Mitigates Impact From Trade Conflict

With high exposure to domestic consumption at 80%, MLT has mitigated uncertainties surrounding the US-China trade tension. Hong Kong continues to be supported by tight occupancies, while Singapore is seeing stabilisation as supply tapers from 2019-21. China has leveraged on domestic consumption growth of tier-2 cities, while Vietnam is seeing positive spillovers. Management continues to monitor the evolving external environment. Maintain HOLD. Target price: S$1.39. Entry price: S$1.26.

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SATS Ltd: Hold on for a better entry

Post our downgrade on 9 Nov and the release of its 2QFY19 results, the share price of SATS Ltd has dropped by 9.1% compared to the STI’s 0.2% fall over the same period, based on the closing price on 28 Nov. We upgraded our rating to BUY on 29 Nov, and the share price of SATS has risen by 6.2% till the closing price on 10 Jan. At current levels, we see diminishing upside in the near term after the price appreciation. Growth at Singapore’s Changi Airport in terms of passenger throughput, aircraft movements and air freight movements for Jan-Nov 2018 has also not been as strong as the same period last year. Trade tensions and weaker sentiment have impacted emerging market currencies and trade volumes. Competition in the airline industry may also continue to result in pricing pressures on SATS, though the lower oil price is a near term reprieve. We update our cost of equity assumptions and our DCF-based fair value estimate slips slightly from S$5.34 to S$5.23. With the limited upside potential, we downgrade our rating to HOLD.

Ascott Residence Trust (ART SP) : BUY

Cashing in

• Disposal of Ascott Raffles Place for S$353m at an estimated 2% exit NPI yield

• Sale price c.64% above the latest valuation • Transaction highlights the inherent value of the stock which the market has under appreciated

• Maintain BUY, S$1.25 TP

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