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Genting Singapore Ltd: Ambitious expansion can be digested


Genting Singapore’s 1Q19 adjusted EBITDA dropped 8% YoY to S$329.7m or 25% of our initial full-year forecast, which we consider below expectations. As a comparison, 1Q18 and 1Q17 adjusted EBITDA formed 29% and 32% of their respective full-year totals. Management expects VIP rolling market to be challenging this year given macroeconomic concerns stemming from the ongoing US-China trade talks and will remain cautious in extending credit for the market. The group’s share price has corrected 11% since the 3 Apr announcement on the RWS expansion. We believe one key worry has to do with the likelihood of a rights issue given the capex required. In our opinion, a rights issue is not likely at this point in time and management has also clarified that they have no intention to conduct a rights issue. After adjustments post this set of results, our fair value dips 6% from S$1.31 to S$1.23. Post the steep share price correction, we see upside to our fair value as at 9 May’s close. We maintain BUY on Genting Singapore.





Singapore Medical Group (SMG SP)

Growth Initiatives Need Time; D/G To NEUTRAL


 Downgrade to NEUTRAL from Buy, with new DCF based TP of SGD0.48 from SGD0.56, 8% upside. Despite higher revenue of SGD21.6m (+12.3% YoY) recorded in 1QFY19, PATMI decreased 3% YoY to SGD3.3m on higher marketing and personnel costs. We think that near-term profit growth should be impacted as the group is likely to incur higher costs as it embarks on aggressive growth expansion. We lower FY19F-21F earnings by 11-14%.


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Aviation – Singapore

Earnings Preview: SIA And SIAEC Likely To Disappoint. STE And SATS Likely To Deliver Organic Growth


We expect SATS’ core net profit to rise by 20%, underpinned by growth from the non-aviation food segment, but expect SIA to report a 37% yoy decline on pre-SFRS 1 based numbers. For STE, we expect low-to-mid single-digit earnings growth due to guidance on higher orderbook recognition in 2019, lower financing costs and a likely improvement in the marine sector’s margins. We are not optimistic of an earnings pick-up for SIAEC and expect the company to cut final dividends. Top picks are SATS and STE.


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Hongkong Land (HKL SP) : BUY

Waning demand led to higher office vacancy


• Central office portfolio vacancy increased on slower leasing enquiries

• Contracted sales in China fell in 1Q19 due to fewer project launches

• Maintain BUY on attractive valuation, US$8.02 TP


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LionelLim8.16Check out our compilation of Target Prices

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