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Overseas Education Ltd

Investing in education with c.9% yield


■ OEL offers rare exposure to Singapore international education and attractive 8.7% div. yield, with over S$20m free cash flow (FCF) from FY17-21F.

■ Steady net profit growth of c.10% in the next two years with the shift towards higher-fee students mix (senior school) and stringent cost control.

■ OEL trades at -1 s.d. below 4-year mean P/E of 22.5x. Catalysts: M&As and expat growth into Singapore. Initiate coverage with Add and S$0.42 TP.


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Parkway Life REIT

Deepens exposure in Japan


■ PREIT buys three Japan properties for S$46.3m.

■ Acquisitions are earnings-accretive, lifting our FY20-21F DPUs by 2%.

■ Maintain Hold with a higher TP of S$3.32.


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Attractive yields & FY21F earnings recovery


■ FY21/22F core EPS could recover 15.1%/7.0% yoy, led by a rebound in associate earnings, partly offset by lower Singapore and Optus earnings.

■ We expect Singtel to keep DPS at 17.5 Scts p.a. in FY21-22F. Net debt/ EBITDA to remain below 2.0x, based on our estimates.

■ Maintain Add with a 3% higher SOP-based target price of S$3.70.


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REITs – Singapore

M&A Galore Foreshadows More Consolidation Between Smaller S-REITs


Three mergers among S-REITs were announced this year. The prime motivation is to enlarge scale, increase free float and aim for index inclusion. S-REITs which are small, risk being marginalised in terms of research coverage by SELL-side analysts, resulting in low trading liquidity. AAREIT and SSREIT could be potential acquisition targets in consolidation among smaller industrial REITs, although our bets are speculative at this juncture. Our top BUYs are ART, FEHT, FCT and MINT. Maintain OVERWEIGHT.


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LionelLim8.16Check out our compilation of Target Prices

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