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CGS CIMB |
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ST Engineering (STE SP) Bumper Contract Wins And Recent M&As Should Boost Earnings Beyond 2021
We are enthused by STE’s ytd S$3.1b in contracts, which included a surprise S$1b naval contract, and could potentially be upsized to S$2.6b if options are exercised. The win should boost the marine division’s earnings beyond 2021. Similarly, the aerospace sector’s 10-year maintenance contract is expected to boost recurrent earnings. With these contracts and recent M&As, STE’s vision of growing revenue and earnings by 2- 3x global GDP growth should come to fruition. Maintain BUY. Target: S$4.70.
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Frasers Centrepoint Trust Deepening exposure to suburban malls
■ Record-high 2Q19 DPU of 3.137 Scts was in line at 26% of our full-year forecast, helped by 4.8% yoy increase in NPI. ■ FCT has deepened its exposure to suburban malls with a total stake of c.18.8% in the PGIM Real Estate AsiaRetail Fund for a total of c.S$376m. ■ Maintain Add with a higher DDM-based TP of S$2.53.
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| CGS CIMB | RHB |
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Mapletree Commercial Trust A good showing
■ 4Q/FY19 DPU of 2.31/9.14 Scts was in line at 25.5%/101% of our FY19 forecast. ■ VivoCity continues to perform well, with higher occupancy at its office properties. ■ Maintain Add with a higher TP of S$2.03.
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United Overseas Bank (UOB SP) Expect Higher Net Interest Income; Retain BUY
Still a Country and Sector Pick; BUY with higher SGD30.80 TP from SGD29.80, based on 2020F P/BV of 1.29x, giving 14% upside plus 5% yield. Whilst 1Q19 NIM could be relatively flat sequentially, net interest income is expected to expand. We believe our long-term ROE assumption of 12.5% (vs 2018’s 11.3%) is achievable given stronger net interest income in 2019 in addition to longer-term digitisation-driven cost efficiencies. We spoke with UOB management and highlight the takeaways here.
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Check out our compilation of Target Prices
