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Wilmar International Buying out Goodman Fielder co-investor
■ We are neutral on Wilmar's plans to buy the remaining 50% stake in Goodman Fielder as the deal will not materially impact near-term earnings. ■ The acquisition is in line with its plan to grow its consumer products business. ■ Maintain Add and SOP-based TP of S$3.96. Listing of Wilmar China is a key potential re-rating catalyst. Downside risk: weaker-than-expected earnings.
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Singapore Reits: A Shelter for doves and uncertainty
The 24 S-REITs under our coverage largely turned in a healthy performance for the recently concluded 4QCY18 results season, delivering average DPU growth of 2.1% on a YoY basis. Looking ahead, we are projecting FY19F DPU growth to come in at 1.9% (market-cap weighted). This is expected to continue in FY20F, with projected DPU growth of 2.4%. While valuations leave nothing to be excited about at this level, in our view, we remain constructive on the near-term trading performance of S-REITs. This would be underpinned by continued benign expectations of the rate hike trajectory by the Federal Reserve in 2019. Maintain NEUTRAL. Our longer term preferred picks are still Keppel DC REIT [BUY; FV: S$1.60] and Frasers Centrepoint Trust[BUY; FV: S$2.50]. We add Ascott Residence Trust[BUY; FV: S$1.25] as a replacement for FLT. |
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UG Healthcare (UGHC SP) Capacity Increase To Drive Volume Production
Reiterate BUY with unchanged SGD0.32 TP, giving 56% upside. Our TP is pegged to 10x FY20F EPS, which is at a discount to the peer average of 17.6x, factoring in UG’s relatively smaller production output. After clarifications with management, we remain bullish on UG given its capacity expansion, which will drive volume production and earnings.
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