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CGS CIMB |
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China Aviation Oil (CAO SP) Improving Chinese Aviation Traffic; BUY
Keep BUY and SGD1.25 TP, 10% upside and 3.4% 2021F yield. China Aviation Oil remains a good proxy to recovering Chinese aviation traffic. We foresee upside risks to 2H20 earnings, if current improvements in daily air passenger volume in China are sustained. Its monopolistic position in China and parent’s ambitions to grow business outside China should be positive for CAO. Moreover, its cost-plus business model should ensure positive FCF generation. CAO is trading below its NTA/share of USD0.95 (c.SGD1.30) and at ex-cash 2021F P/E of just 3.5x
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Riverstone Holdings Higher ASPs on the cards
■ We reiterate our positive view on RSTON, as we believe higher ASPs are on the cards given the surge in glove demand. ■ We now impute 10%/15% ASP growth qoq for healthcare gloves in 2Q/3Q20F. Cleanroom glove prices could also trend up in 3Q20F. ■ We raise our FY20-22F EPS forecasts by 5.7-24.9%; TP is lifted to S$3.12.
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UOB KAYHIAN |
DBS VICKERS |
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ARA US Hospitality Trust (ARAUS SP) Climbing Out Of A Ditch
US lodging REITs have rallied on re-opening optimism and seven consecutive weeks of rising occupancies. Management noted that a swift recovery would be dependent on corporate demand returning by late-summer (Aug 20), which will allow for better pricing optimisation and yielding-up. The outlook continues to be challenging as management navigates the full re-opening of the remaining 11 hotels by midsummer. Maintain BUY on valuation grounds with a lower target price of S$0.69.
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‘Panic selling’ opens opportunity to bargain hunt Circuit Breaker easing beneficiaries
• What happened – US stocks tumbled (banks, autos, energy and material sectors) as investors took profit amid fears of a resurgence in US Covid-19 cases in the weeks following easing lockdown measures after daily cases in some States trended up • Sentiment likely tentative in the near-term as investors track daily US Covid-19 infections – Concern is that the nationwide civil protests over the past week may fan infections • We think Asian markets may not give back all gains over the past 2 weeks amid re-opening optimism as countries gradually and cautiously ease Covid movement restrictions • Key European countries are not seeing resurgence in Covid-19 cases so far as their economies reopen
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Check out our compilation of Target Prices
