| MAYBANK KIM ENG |
UOB KAYHIAN |
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Manulife US REIT (MUST SP) A Play On Work
Stable core with embedded growth; Initiate at BUY Manulife US REIT (MUST), with its seven freehold US office assets backed by high-quality tenancies, remains a good proxy for favourable US macroeconomic fundamentals, in our view. DPU visibility is supported by stable income growth and low leasing risks, with: 1) 94% of its leases embedded with either annual rental escalations averaging 2.5% or mid-term, periodic rental increases; 2) a long 5.8-year WALE with 48.7% of gross rental income expiring after 2023; and 3) a diversified 116-strong tenant base. MUST offers 6.9-7.1% FY19-20E DPU yields vs 4.6-6.6% promised by its office S-REIT peers. We initiate coverage with BUY and a DDM-based TP of USD1.00 (COE: 7.7%, LTG: 2.0%). Key risks are: 1) adverse changes to its US REIT status; 2) changes to tax regimes; and 3) a slower US office sector outlook.
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Fortress Mineral (FMIL SP) High-grade Iron Ore Play
FMIL produces high-grade iron ore concentrate mined from deposits in the Bukit Besi mine at Terengganu, Malaysia. With an estimated output capacity of 40,000 wet metric tonnes per month, FMIL is well-positioned to ride on increasing demand from Chinese steel mills as China addresses the twin problems of pollution and inefficient steel mills.
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| PHILLIP SECURITIES | CGS CIMB |
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Geo Energy Resources Ltd Lacklustre outlook in 2019 SINGAPORE | MINING | 4Q18 RESULTS
4Q18 revenue and net profit missed our expectations due to lower production volume and ASP We lower our FY19e sales volume to 8mn tonnes (previously 10mn tonnes) and revise down the ASP to US$40.2/tonne (previously US$41/tonne). Meanwhile, we lower the cash cost to US$29.5/tonne (previously US$30/tonne). Accordingly, FY19e EPS is cut to 1.6 US cents (previously 3.3 US cents). Based on an unchanged forward PER of 10x (average of regional peers) and the exchange rate (USD/SGD) of 1.35, we downgrade to ACCUMULATE recommendation with a lower target price of S$0.215 (previously S$0.245).
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Y Ventures Group Ltd At a potential inflection point
■ Sell-off in YVEN could be overdone after 75% decline in price YTD. ■ YVEN will focus more on books and differentiated merchandise and is looking to monetise its data analytics in a bid to turn around to profit. ■ We upgrade YVEN from Reduce to Add with a higher TP of S$0.15 as we look to a possible turnaround on strong sustained sales growth ahead.
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