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MAYBANK KIM ENG |
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Japfa (JAP SP) 1Q19: Drag From Low Broiler Prices In Indonesia
1Q19 core net profit declined 33% yoy, missing expectations at 15% and 17% of our and consensus full-year estimates. The miss was mainly due to low broiler ASP in Indonesia due to a temporary supply-demand imbalance. The Vietnam swine business continued to report a healthy profit but dairy profit declined marginally. We slash our 2019 EPS by 28% to account for the weaker Indonesia business, and our target price by 26% to S$0.73. Maintain BUY.
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Frasers Hospitality Trust (FHT SP) Supportive Valuations
Slow quarter, dragged by currency headwinds FHT’s 2Q19 DPU was in line with both MKE and consensus estimates; DPU fell 11.5% YoY on a weaker performance at its portfolios in Australia, Malaysia and Japan. This was exacerbated by depreciation in their respective currencies, which contributed to a 53%/40% decline in their gross revenues/NPIs. Our forecasts are unchanged and our DDM-based TP stays at SGD0.85 (COE: 7.4%, LTG: 2.0%). We reiterate BUY with the shares undervalued vs. historical mean and peers at 0.8x FY19E P/B. For now, a re-rating could be led from a potential portfolio reshuffle, given tight cap rates for Sofitel Wentworth Sydney and positive yield-spreads in Europe, supported by its low 34.1% gearing and sponsor’s growing AUM.
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| PHILLIP SECURITIES | UOB KAYHIAN |
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China Sunsine Chemical Holdings Ltd Soft sunshine SINGAPORE | MATERIALS | 1Q19 RESULTS
1Q19 revenue and net profit missed our expectation due mainly to lower ASP. ASP fell to a 7-quarter low. Maintain high margins amid volume growth (Gross profit/tonne dropped 24.8% YoY or 2.3% QoQ). Recent Yancheng accident and the recovery of crude oil price could support raw material prices. We revise down FY19e EPS by 4.1% to 21.1 SG cents and FY20e EPS by 6.4% to 22.1 SG cents. Based on an unchanged required rate of return of 10%, we maintained our BUY recommendation with a lower target price of S$1.43.
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Venture Corp (VMS SP) Sensitivity Analysis On Contribution From iQOS
On 30 April, the US FDA cleared iQOS and the product will start selling in the US in Jun 19. As one of the device manufacturers, Venture could benefit but any contribution should start only in 2020 due to inventory backlog and competition. We assume Venture would manufacture 12m IQOS devices in 2020. Every 1m additional devices could increase net profit by S$7.3m, or 1.8% of 2020 net profit. Maintain HOLD. Target price: S$19.01. Entry price: S$17.00.
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