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Offshore & Marine Watch Out For More Restructuring; Stay O/W
Keep OVERWEIGHT, as expectations of further restructuring will catalyse all three offshore & marine (O&M)-related stocks’ prices. Top Pick: Keppel Corp (KEP), with Temasek’s partial share offer as a precursor to restructuring and catalyst to share price upside. While KEP’s O&M business should be weak over the next few quarters, the property wing could still drive profitability. Our next preference: Sembcorp Industries (SCI), which should emerge from the de-merger with Sembcorp Marine (SMM) without an O&M business and, thereafter, enjoy more stable earnings.
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ARA LOGOS Logistics Trust Shifting focus to growth
■ We see more earnings clarity and stronger focus on growth going forward. ■ Tapering supply and the partnership with LOGOS provide ALOG organic and inorganic growth opportunity. ■ Upgrade from Hold to Add. ALOG is trading at 1x P/BV, 1.5 s.d. below mean.
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Check out our compilation of Target Prices