ANALYSTS SAY: Buy, Sell, Hold (30 Sept 2019)

RHB 

Venture Corporation Limited

Gaining profit share

SINGAPORE | TECHNOLOGY MANUFACTURING | INITIATION 30 September 2019

 Exceptional margins and consistency in capturing a larger profit share of the industry.

 Healthy operating cash-flows and cash holdings to support 4.6% dividend yield.

 Valuation is attractive against its peers due to its superior ROE, margins and balance sheet.

 Beneficiary of the on-going electronics supply chain disruption in China.

 Initiate coverage with a BUY rating and a target price of S$17.68. Our valuation is based on a 14x PE multiple.

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Wilmar (WIL SP)

China IPO Still The Key Catalyst; Maintain BUY

 Reiterate BUY, higher TP of SGD4.75 from SGD4.50, 27% upside and c.3% dividend yield. This is due to our sector upgrade to OVERWEIGHT, as we expect CPO prices to rerate upwards in 4Q19 and continue their upward trend in 1H20. CPO prices are the leading indicator for plantation P/E valuations. Being one of the largest oil palm owners, we expect Wilmar’s upstream business to benefit from rising CPO prices. We now value its plantations at a higher P/E.

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RHB 

First Resources (FR SP)

Sensitive To CPO Prices; Upgrade To BUY

 Upgrade to BUY from Neutral, new TP of SGD1.90 from SGD1.45, 19% upside. This is on our sector upgrade to OVERWEIGHT, as we expect CPO prices to rerate upwards in 4Q19 and continue increasing in 1H20. We believe plantation stocks would also likely rerate on the back of this price movement, as CPO prices are the leading indicator for plantation companies’ P/Es.

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Mapletree Commercial Trust (MCT SP)

Strengthens Foothold In The HarbourFront Area; Downgrade To HOLD

MBC2 is a solid asset with grade-A quality business park space, blue chip tenants such as Google, and high occupancy rate of 99.4%. On a pro forma basis, the acquisition enhances FY19 DPU and NAV per unit by 4.0% and 2.2% respectively. The size of equity fund raising is slightly larger than anticipated at 500m new units and would reduce gearing from 33% to 31%. Share price has gained 41.8% ytd and could consolidate in the near term. Downgrade to HOLD. Target price: S$2.38. Entry price: S$2.16.

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