• Assuming COVID-19’s impact lingers throughout 2020, we cut our earnings forecasts by 9-10% for Singtel and StarHub
• Netlink is our top pick for earning resilience and ~5.8% yield. We also like Singtel for ~5.4% dividend yield, nearly +2 standard deviation (SD) of its mean and StarHub for 7% yield (near +1SD of its mean)
• Key risk will be stocks dropping to our bear-case valuation leading to a potential loss of 10% to 15%.
Covid-19 and low crude oil prices; priced in
■ We think value in CSE is emerging as it now trades below its 2014-19 average 12M forward mean, and closer to trough of 7.9x P/E in Dec 2018.
■ Lower crude oil prices and capped activity levels warrant conservatism in our forecasts. But the c.36% share price plunge YTD has likely priced this in.
■ We think the risk-reward ratio is favourable at current levels. Reiterate Add, with a lower TP of S$0.45, now based on 11x CY21F EPS.
|DBS VICKERS||DBS VICKERS|
Singapore retail landlords
In for a rough ride
• Suspension of Entertainment and Leisure businesses till end April-20 will impact overall retail scene
• Retail landlords face operational uncertainties as malls cope with tighter measures (shorter operating hours and higher social distancing measures) or closures
• Affected businesses may seek more help and rebates in our view
• Sensitivity analysis: Our FY20F DPU estimates could drop by 4-13% (vs 2-4% previously) to factor in the impact of above measures
ESR-REIT (EREIT SP) : BUY
Enough Selling al-Ready!
• Interest expense savings from early refinancing; no refinancing in 2020
• Earnings relatively sheltered for now; retail tenants facing more challenges
• Long-term goals still intact despite a pause in near-term inorganic growth plans
Check out our compilation of Target Prices