ANALYSTS SAY: Buy, Sell, Hold (15 Feb '19)

MAYBANK KIM ENG

mm2 Asia

Near-term pain, long-term gain

■ 3QFY3/19 core PATMI fell 59% yoy to S$2m, missing our/consensus forecasts.

■ We lower FY19-21F EPS by 29-30% and our SOP-based TP to S$0.37. Our Add call is premised on 25-32% EPS recovery in FY20-21F.

■ Faster cinema turnaround and deleveraging of balance sheet are the two potential re-rating catalysts.

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Singapore Telecommunications (ST SP)

Lower guidance likely priced in

In line with MKE, below consensus; maintain HOLD

9MFY19 results were in line with MKE forecast at 77% of our FY19E of core profit but below FactSet consensus. We believe the market has largely priced in new guidance of softer group EBITDA. However, under the current competitive environment, catalysts are not forthcoming soon. We maintain our SOTP-based TP of SGD3.39 and HOLD rating. In the Singapore telco space, Netlink NBN Trust (NETLINK SP, SGD0.805, BUY, TP SGD0.93) is our top pick.

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Centurion Corporation Limited

Opportunities in Penang

SINGAPORE |REAL ESTATE| SITE VISIT NOTE

We were hosted by Centurion Corporation Limited to attend the completion ceremony of their Westlite Bukit Minyak facility – Penang’s maiden worker dormitory facility – on 29 January 2019. Westlite Bukit Minyak is the first of eight Centralised Accomondation Transit (CAT), also known as Purpose-Built Workers Accommodations (PBWA), to be built in Penang. We also visited the two industrial parks in Batu Kawan, which is home to the manufacturing arms of several MNCs in the medical devices, automobile and electronics and engineering (E&E) sectors.

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StarHub Ltd: First cut is the deepest

Starhub’s FY19 dividend guidance brings Sheryl Crow’s song to mind. The group’s intended 9 S-cents/share (FY18: 16 S-cents/share) comes in below ours and the street’s estimate, though this initial guidance could have some upside depending on core NPAT. 4Q18 revenue fell 9.8% YoY to S$619.5m, with all segments registering a YoY decline barring Enterprise Fixed. On a full-year basis, FY18 results were within our expectations as underlying NPAT came in at S$215m, forming 97.2% of our forecast. The outlook for the group remains challenging, especially with TPG Telecom’s commercial roll-out on the horizon. Starhub has made some headway with renegotiating some Pay-TV contracts away from a fixed-pricing model, but structural issues still remain. Following cuts to our earnings estimates and adjustments, our FV drops from S$1.92 to S$1.64. Thus, we downgrade Starhub from Hold to SELL.