| PHILLIP SECURITIES |
CGS CIMB |
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Netlink NBN Trust
The fibre landlord SINGAPORE |TELECOMMUNICATION| INITIATION 27 March 2019
Sole network provider of residential fibre broadband in Singapore Stable and recurrent cash-flows from a customer base of 1.3mn Future growth from NBAP and non-residential end-user connections We initiate coverage on NLT with a target price of S$0.89. We used a DCF approach in our valuation because of the regular stream of cash generated from NLT’s fibre business. Our valuation is based on a WACC of 6% and a terminal growth rate of 1%.
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Biolidics Ltd Liquid could be the new solid
■ We initiate on liquid biopsy diagnostic firm Biolidics with Add and TP of S$0.32, based on 12x FY20F EV/Sales (below global peer average of 16.8x). ■ The company’s unique technology platform and strategic partnerships makes it a potential key beneficiary of the growing liquid biopsy industry. ■ We expect Biolidics’ net losses to narrow significantly in FY19-20F, with sales CAGR of 78% in FY19-21F and better cost management.
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| MAYBANK KIM ENG | UOB KAYHIAN |
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Singapore Banks Bouncy territory
Expect strong support at current levels Singapore banks have de-rated 3% since mid-Feb. We believe expectations of limited earnings/dividend visibility from a dovish Fed and weaker NIMs are the likely drivers behind this. But this price action is now testing a key downside support level established since Oct 2018. We expect a rebound. We argue that earnings/dividend visibility is actually quite high. 92% of this year’s dividends are already ‘in the bag’ - the sector has to only repeat 2018’s performance. Incremental dividends will come from loan yields catching up to past rate hikes. In 2019E, the banks will support rising sector ROEs and a 4.8% dividend yield – higher than SG REITS and regional peers. Past rebounds from the current level have returned 9% absolute price performance. Remain positive on Singapore banks with DBS as our top pick.
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Koufu Group (KOUFU SP) Defensive Staple With A Growth Story
Koufu held a corporate luncheon to highlight new developments. Management reaffirmed Koufu’s growth strategy, provided details and reported on its progress. Backed by home-ground advantage with an overseas growth angle, Koufu is a bright spark in an industry caught up in cost-cutting initiatives to counter the recent curb in the dependency ratio ceiling. Reiterate BUY and PE-based target price of S$0.95.
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