Broker's Digest 12 Aug 2019

APAC Realty (Aug 6: 51.5 cents)

•           MAINTAIN ADD.  2Q/1H2019 profit declined to $3.2 million/$5.1 million, below our expectation
•           1H2019 DPS of 0.75 cent was lower than our expectation
•           Our price target dips to 60 cents, still based on an average of 10x FY2020F PER and DCF valuation

CapitaLand Retail China Trust (Aug 6: $1.53)

•           MAINTAIN HOLD.  CRCT plans to raise gross proceeds of about $279.4 million by way of a private placement of 105,043,000 new units at an issue price of $1.469 per new unit
•           We believe that the addition of the three malls to CRCT’s portfolio remains a strategically wise transaction
•           Fair value estimate of $1.45 for now

Genting Singapore (Aug 6:  87 cents)

•         MAINTAIN NEUTRAL.  2Q2019 adjusted Ebitda grew 11% y-o-y to $294 million, bringing 1H2019 adjusted Ebitda to $624 million, which represents 50% of our estimates
•           According to management, the 50% increase in casino levy for Singaporeans and permanent residents had a significant  impact on mass gaming
•           We cut our adjusted Ebitda by 10%/7%/3% for FY2019-FY2021F as we lower our mass volume assumption and normalise the win rate.
•           This lowers our price target to 97 cents from $1.02

Hi-P Int’l (Aug 6: $1.21)

•           DOWNGRADE TO SELL. 2Q2019 Patmi rose 17% y-o-y despite a 5% drop in revenue, surpassing our expectation of flat y-o-y
•           Despite now guiding to lower earnings y-o-y, guidance for revenue was maintained at flat y-o-y.
•           We cut revised FY2019-FY2021E EPS by 4% to7% to reflect management’s revised guidance
•           Price target falls to $1.15.  Downside of 14% to our revised price target

Japfa (Aug 6: 49 cents)

•           MAINTAIN HOLD.  Japfa’s 2Q2019 headline earinings came in at US$5 million, down 83% y-o-y from US$29.6 million in 2Q2018
•           Our sum-of-the-parts (SOTP) based price target, after incorporating a 10% holding company discount, is 53 cents (which implies 12.5x FY2019F PER)
•           We see continued challenges in its Indonesia operations in 2H2019 and uncertainties arising from the outbreak of the African swine fever virus in Vietnam

Oversea-Chinese Banking Corp (Aug 6: $11.02)

•           MAINTAIN HOLD.  We remain cautious over its non-performing assets coverage, which at 78% remains the lowest among its peers
•           OCBC currently trades at about 1.1x FY2020F P/BV, near one standard deviation below its average 10-year forward P/BV multiple
•           A higher dividend payout ratio for OCBC, closer to its peers’ 50%, could be a rerating catalyst
•           Price target of $11.50

Penguin Int’l (Aug 6: 49.5 cents)

•           MAINTAIN ADD. Penguin Int’l (PBS) made great strides, with 2Q2019 revenue jumping 164.1% on 2Q2019 chartering and shipbuilding revenue
•           As at 1H2019, PBS was in net cash position of $48.5 million (21.7 cents a share)
•           We value PBS at 1x FY2019F P/BV (excluding about $5 million investment in Marco Polo), at a 20% discount to its small to mid-cap peers’ 1.2x aggregate P/BV pre-oil crisis
•           Price target of 72 cents

Singapore Exchange (Aug 6: $7.90)

•           DOWNGRADE TO HOLD.  Singapore Exchange (SGX) reported a strong 4Q2019, with core net profit rising 24% y-o-y and bringing full-year earnings to 103% of our consensus forecasts
•           Management guided for higher opex of $465 million to $475 million and lower capex of $45 million to $50 million in FY2020F.
•           Final DPS of 7.5 cents brings FY2019 DPS to 30 cents (82% payout), within expectations
•           Limited upside supported by a 4% dividend yield

United Overseas Bank (Aug 6: $25.66)

•           MAINTAIN BUY.  2Q2019 net profit rose 8% y-o-y and 11% q-o-q
•           Management guided for single-digit 2019 fee income growth.
•           We raise our 2019F net profit by 1%, but lower our 2020F net profit by 5% on weaker NIM assumption
•           Our valuation for UOB is based on long-term ROE assumption from which we derive our price target of $29.50 (12% upside plus 5% yield)

(Source:  TheEdgeSingapore August 12 2019)

Brokers' Digest 7 May 18

DBS Group Holdings (May 2: $30.61)
- Maintain neutral.  1Q 2018 net profit stood at $1.51 billion, which was up 27% q-o-q and 21%
y-o-y.
- We lift our 2018F net profit by 6% to $5.67 billion, mainly on a higher NIM assumption.  We raise our 2018F net interest income growth to 8.7%, from 7.6% previously.  This factors in 2018F loan growth of 8%
- We raise our Gordon growth model-derived price target to $29.60 (from $27, a 4% downside) as we increase our ROE assumption to 12.9% (from 12.7%)

iFAST Corp (May 2: 90 cents)
- Maintain Buy.  iFAST has made significant progress in the last two to three years by broadening the range of investment products and services on its platforms and laying the infrastructure to kick-start its business in China, a market it believes will be key in the future
- Improved revenue and profitability in 1Q2018, mainly owning to an increase in AUA for both B2B business and B2C business in the period, which benefited from new inflow of investments from customers as well as relatively positive market sentiment in the period
- Price target of $1.26 based on the dividend discount model (DDM) valuation methodology, given that it is a cash led business, supplemented by a relatively high dividend payout ratio of about 60%

Manulife US REIT (May 2: 94 US cents)
- Maintain Buy.   Manulife US REIT reported 1Q2018 distributable income of $15.6 million, exceeding our forecast of $15.3 million
- We raise our price target to US$1.02 marginally as we revise the 2018/2019/2020F DPU upwards to 6.1/6.9/7.7 US cents. 
- As highlighted in our April 17 report, we continue to wait for further clarity on the final decision regarding the financing mix of Penn and Phipps, as well as the actual impact on DPU.

Mapletree Logistics Trust (May 2: $1.28)
- Maintain Buy.  Mapletree Logistics Trust (MLT) reported its 4QFY2018 results, which met our expectations, with DPU growing 4.1% y-o-y to 1.937 cents.
- We fine tune our assumptions and now factor in a lower distributions from the divestment gains from 7 Tai Seng Drive.  Our fair value inches down from $1.48 to $1.44

Raffles Medical Group (May 2: $1.16)
- Maintain Buy.  Raffles Medical Group's (RMG) 1Q2018 scorecard was within ours and the street's expectations
- In our opinion, the lower y-o-y projected Patmi levels for FY2018 and FY2019, resulting largely from the expected start-up losses, should have been well-digested by the street as this has been guided by management for a few quarters now.  We maintain our assumptions and fair value estimate of $1.26

SPH REIT (May 2: 99 cents)
- Maintain Hold.  SPH REIT has announced that it has purchased The Rail Mall, its maiden acquisitions post-listing. 
- Given the low debt funding cost, the deal is anticipated to be accretive to the bottom line. 
- We raise our FY2019-FY2020F DPU estimates by about 1% to account for the new contributions from this purchase.  DDM-based price target is raised slightly to $1.07.  SPH REIT offers investors 5.6% to 5.8% FY2018-FY2019 dividend yield

Tianjin Zhongxin Pharmaceutical Group Corp (May 2: US$1.04)
- Maintain Buy.  Outperforming our expectations, Tianjin Zhongxin Pharmaceutical Group's 1Q2018 profit represents 31.8% of our estimate on a normalized basis.
- We tweak our 2018-2020 net profit attributable to shareholders to RMB589.3 million (+3.5%), RMB696.6 million (+3.9%) and RMB748.5 million (+4.5%), respectively.  PER-based price target of US$1.72 (RMB6.29/US$), pegged to peers' average of 14.1 x 2018F PER.

Tuan Sing Holdings (May 2: 42 cents)
- Maintain Buy.  For 1Q2018, Tuan Sing Holdings' (TSH) results were above our expectations as the $8.2 million (+55.6% y-o-y) profit included a $3.5 million gain on disposal.
- Unchanged sum-of-the-parts-based price target of 71 cents, implying a 65.1% upside.  At current prices, TSH is trading at fire-sale levels of 51.4% of book value

Valuetronics Holdings (May 2: 78.5 cents)
- Maintain Buy.  Valuetronics' share price has slumped 25% since its Dutch MNC customer reported a 1Q2018 earnings miss, owing to weak sales at its home lighting division.
- We believe the recent share price correction presents a good buying opportunity at an attractive FY2018F yield of 6.6%, as we believe the recent selling is overdone.  We lower our price target to 96 cents, assuming a lower FY2019F PER of 10x (from 11x), owing to the weaker sentiment globally for the electronics and semi-conductor sector

(Source:  TheEdgeSingapore May 7 2018)

Brokers' Digest April 23 2018

CSE Global (April 18: 42.5 cents)

• Maintain Hold.  New major shareholder Serba Dinamik (SDH) heralds new contract opportunities, but more details are needed for further earnings rerating
• SDH’s main presence is in Malaysia and the MiddleEast and it provides engineering solutions mainly to downstream oil and gas and power generation industries
• We lift our price target to 44 cents, now based on 13.5x CY2019F PER versus 12x previously

Keppel DC REIT (April 18: $1.43)

• Maintain Hold.  Keppel DC REIT (KDCREIT) reported its 1Q2018 results, which met our expectations.
• Given limited debt headroom, coupled with its end-2018 asset under management target of $2 billion and long-term aggregate leverage target of 30%, we believe there are potential dilution risks in the near future
• We do not find current valuations appealing, with a FY2018F distribution yield of 5.3% and P/BV ratio of 1.5x, as at closing price of $1.46 on April 16
• Fair value estimate of $1.50

Keppel Infrastructure Trust (April 18: 54.5 cents)

• Maintain Buy.  Keppel Infrastructure Trust (KIT) maintained its record of steady DPU of 0.93 cent in 1Q2018, as expected
• Share price dampened, owing to negative news flow from the Basslink asset.  We believe KIT is sufficiently ring-fenced from possible legal penalties at Basslink
• Based on our dividend discount model-based valuation methodology, we derive a valuation of 60 cents for KIT

Kimly (April 18: 34.5 cents)

• Buy (initiating coverage).  Kimly operates and manages coffee shops and food courts locally, which have a defensive nature accompanied by rich cash flows
• Management intends to declare an annual dividend of not less than 50% of net profits attributable to shareholders as dividends, which suggests a yield of 2.9% for FY2018F
• We think that the new outlets it invested in during 2017 and coming up in 2018 are likely to be profitable in 2019-2020
• DCF- derived price target of 43 cents

Lippo Malls Indonesia Retail Trust (April 18: 33 cents)

• Downgrade to Sell.  Lippo Malls Indonesia Retail Trust (LMIRT) announced that Indonesia has passed new tax regulations on income received/earned from land and building leases in the country, which is effective from Jan 2
• Assuming the new regulations were in effect as at Jan 1, 2017 instead, the REIT manager calculates that FY2017 DPU would have been 7.2% lower at 3.19 cents
• We believe the multiple challenges that have come to light will continue to plague the REIT’s operations, despite respectable efforts on the part of management
• Our fair value decreases 23.5%, from 40.5 cents to 31 cents

M1 (April 18: $1.78)

• Maintain Hold.  M1’s 1Q2018 revenue rose 0.5% y-o-y to $254.1 million, driven mainly by fixed services and mobile postpaid revenues, but partly offset by weaker handset sales and international call services
• Over the medium to longer term, we do expect M1 to scale up its ICT capabilities and solutions to capture opportunities relating to IoT and Smart Nation initiatives.
• We keep our forecasts and fair value estimate of $1.70

Manulife US REIT ( April 18: 92.5 US cents)

• Maintain Buy. Manulife US REIT  announced the acquisition of 1750 Pennsylvania Avenue (Penn) in Washington DC and Phipps Tower (Phipps) in Atlanta for an aggregate purchase cost of US$387 million
• The net property income (NPI) yields for the acquisitions of Penn and Phipps are 5.2% and 5.9% respectively
• While we note that there is some concern o the REIT’s rapid pace of acquisition led growth, we believe that acquisitions have not compromised unitholders’ interests and would ultimately benefit them
• Price target revised to US$1 (98 US cents previously)

SATS (April 18: $5.45)

• Maintain Buy.  SATS and Capital Airports Holding will inject a US$28 million equity in Beijing Aviation Ground Services (BGS),  but the shareholding structure is inequitable
• SATS is very likely to book unrecognised losses of $7 million to $9 million from BGS in FY2019, arising from the increased investment. 
• We lower our FY2019 net profit estimate by 4.4% after factoring in lower associate earnings arising from the $8 million loss assumption
• Our price target is consequently lowered to $5.80

Soildbuild Business Space REIT (April 18: 65.5 cents)

• Maintain Hold.  Gross revenues for 1Q2018 stood at $19.4 million, representing a y-o-y decline of $2.5 million (or 11.5%)
• We estimate revenue impact from the divestment of KTL Offshore to be about $2 million for FY2018F.  For 1Q2018, distributable income of $14 million was 10.4% lower versus 1Q2017’s
• Occupancy fell lower to 87.5%, outlook remains challenged
• Price target of 62 cents

(Source:  TheEdgeSingapore April 23 2018)