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China Sunsine Chemical (CSSC SP)
Scaling up to meet insatiable rubber chemicals demand
Further capacity expansion for operating leverage CSSC has finally obtained government approval for the trial run of its new 30k tonne capacity TBBS production line and a 10k tonne insoluble sulphur (IS) line at its current Shanxian site. TBBS is used as a fast vulcanization accelerating agent for automotive tyres. CSSC is already planning for future capacity growth and has entered into an agreement with the government to acquire 534,000 sqm of land in the Shandong Shanxian Chemical Zone to build more lines. Currently, competitors have yet to announce any concrete plans for capacity expansion and/or ink land deals.
Singapore Airlines (SIA SP)
Demand For Pax Traffic Remains Strong But Uncertainty About B373 Max’s Grounding Remains The Biggest Concern
Pax traffic remained robust, with SIA’s pax traffic rising 6.6% yoy for Mar 19 and 8.8% yoy for 4QFY19. However, cargo traffic declined yoy for seven straight months. Uncertainty regarding the grounded aircraft is likely to limit upside over the next three months. SIA also faces downward risk to profits due to the rise in jet fuel costs. Maintain HOLD and target price of S$10.10. Suggested entry level is at S$9.00.
Keppel DC REIT
Delivering steady growth
■ 1Q19 DPU of 1.92Scts was in line at 24% of our FY19 forecasts; the 6.7% yoy improvement was due to contributions from acquisitions in FY18.
■ Higher gearing of 32.5% due to issuance of floating rate notes reduces debt headroom from S$335m to S$273m.
■ Maintain Add with an unchanged DDM-based TP of S$1.54
Accordia Golf Trust (AGT SP)
Ground Checks: AGT’s Yield Accretive Green
We visited five of AGT’s golf courses in early April and came away positive. We note that the number of players and utilisation rates have improved, pointing to a positive 4Q18. Management revealed it is keen to acquire more accretive golf courses via debt and equity as well as offload underperforming golf courses to fund for these accretive acquisitions. The consensus dividend yield of FY19F stands at 7.1%, an improvement from FY18 despite a recovery in its share price.
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