ANALYSTS SAY: Buy, Sell, Hold (25 Jan '19)

CGS CIMB

CapitaLand Commercial Trust (CCT SP)

4Q18: Strengthens Core In Singapore; Enlarges Scale In Germany

NPI grew 16.6% yoy in 4Q18 due to contributions from the newly-acquired AST2 and Gallileo, which more than offset the loss of income from the divestment of Twenty Anson. DPU increased 6.7% yoy to 2.22 S cents. Limited upcoming supply of office space within the core CBD augurs well for continuation of uptrend in office rents. We expect positive rental reversion for AST2 in 1H19 and CapitaGreen in 2H19. CCT will pursue investments in Singapore and Germany. Maintain BUY. Target price: S$2.16.

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Singapore Exchange

2QFY6/19: yoy and qoq stronger

■ SGX’s 2QFY19 core net profit improved 9.2% yoy and 6.0% qoq to S$95.6m.

■ Growth in both market data/connectivity and derivatives helped offset weaker SDAV and higher costs; we expect this trend to sustain in the near term.

■ We raise our FY19-21F EPS by 3.5-3.9% on higher derivatives volume. Our TP is now higher at S$7.90 (pegged to 22.1x CY20F P/E). Maintain Add.

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Singapore Airlines (SIA SP)

Time to be positive, U/G to BUY

Lower risk with decent earnings growth potential

Upgrade to BUY from HOLD and raise TP 14% to SGD11.20 as we raise P/B multiple to the historical avg. from 1SD below due to lower risks to growth. Our revised TP is based on 10-year P/BV mean of 0.94x vs. 0.82 previously. We estimate 3QFY19 (out Feb-19) core net profit of SGD316m (+14% YoY, +80% QoQ). 3QFY19’s overall load factor eased by 0.3ppt YoY and QoQ to 76.1% and we expect yields to continue its downtrend (-1.1% YoY), but lower fuel price (-3% QoQ) has more than offset this. We raise FY19-21E earnings by 33%, 37% and 17% respectively to factor in lower fuel price, better yield outlook, its latest traffic-growth plans and USD/SGD estimates.

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Keppel Corporation: Cautiously optimistic on O&M

Keppel Corporation (KEP) delivered an 8.5% YoY rise in revenue and net profit of S$134.5m in 4Q18, bringing FY18 net profit to S$943.8m vs. our forecast of S$962m. Net profit in FY18 was 16% higher compared to FY17, excluding the one-off global resolution and related costs in FY17. Excluding one off items, the O&M division was profitable (S$39m net profit) in 4Q18, which is encouraging. The segment made S$167m additional provisions for losses on semi-submersibles for Sete Brasil and S$32m impairments on other assets in 4Q18. Looking ahead, the group is cautiously optimistic about the offshore production market, as it sees opportunities in FPSOs, especially conversions. As for Property, the group is still upbeat on selected regions. We update our estimates and our FV estimate for KEP rises from S$7.25 to S$7.55. Maintain BUY.