Brokers' Digest 19 February 2018

CEI (Feb 12: $1)

- Downgrade to HOLD

- FY2017 revenue grew 5% y-o-y, but gross profit margin fell slightly to 23.1% versus 23.3% in FY2016, resulting in core net profit coming in 13% below our expectations

- In terms of outlook, CEI expects to continue generating net profit in FY2018F

- We cut our FY2018-FY2019F EPS for weaker margins.  Rolling over to FY2019F, our price target is reduced to $1

CITIC Envirotech (Feb 12: 71 cents)

- Maintain BUY

- Management is exceptionally confident about the company's outlook amid strong government emphasis on environmental protection and we share their confidence

-  With management bidding for multiple mega projects and confident of winning some, we believe CEL can deliver at least another $1 billion in project wins in 2018

- We raise our 2017 to 2019 net profit forecasts by 2.8%, 10.4% and 19.2% respectively

- Discounted cash flow based price target raised to $1.11

DBS Group Holdings (Feb 12: $27.31)

- Maintain OUTPERFORM

- Final dividend of 60 cents (versus 30 cents in 2016) and special dividend of 50 cents were declared, a major positive surprise.

- We have trimmed 2018 net profit estimate by 4% to factor in higher expenses, but kept 2019 net profit estimates unchanged

- We roll forward our price target to $31.10 a share

Frasers Property (Feb 12: $1.93)

- Maintain BUY

- We are the most bullish among consensus and we believe FPL will benefit from the recovery in Singapore office market

- Despite its diminishing landbank in Singapore, we believe any potential landbanking activities will be a positive catalyst

- Price target of $2.35, implying a 1x price to NAV

mm2 Asia (Feb 12: 46.5 cents)

- Maintain BUY

- Net earnings jumped a smaller 53% to $6.4 million on lower margins

- Having a strong presence in the entire value chain of content creation and distribution further cements mm2's status as a leader in the media/entertainment industry

- Price target of 75 cents, as we roll forward valuation to FY2019F

Moya Holdings Asia (Feb 12: 8.8 cents)

- Maintain BUY

- It is now Indonesia's largest water treatment operator

- We advise investors to accumulate the stock after the recent share price correction

- Unchanged DCF-backed price target of 17 cents (91% upside)

Neo Group (Feb 12: 66.5 cents)

- Maintain NEUTRAL

- Neo Group has managed to turn in a profit in 3QFY2018, in line with our expectations

- The group has an interest cost of 3% to 3.5%.  Given the huge borrowings, the interest payment easily represents 50% of our FY2018F Patmi

- The group still needs at least two to three years of spectacular results to bring down its net gearing ratio to a more reasonable level.

- Price target of 64 cents (4% downside)

Perennial Real Estate Holdings (Feb 12: 83.5 cents)

- Maintain ADD

- Perennial reported a 25.7% y-o-y drop in 4Q2017 revenue to $16 million, while net profit came in 8% higher y-o-y at $27.6 million

- We expect FY2018F earnings to benefit from additional rental contributions in China, while development contributions are likely to be felt from FY2019F.

- Our price target of $1.12 is based on a 40% discount to revalued NAV.

Singapore Telecommunications (Feb 12: $3.36)

- Maintain BUY

- Singtel's 9MFY2018 operating revenue grew 6.5% y-o-y to $13.21 billion, largely driven by Australia consumer and Digital Life

- Looking ahead, we reiterate our positive view on Singtel's longer-term outlook, given its focus to grow its cybersecurity, ICT solutions capabilities, digital advertising and other digital related businesses

- However, on fairly muted contributions from associates ahead, we adjust our forecasts slightly downwards and reduce our fair value from $4.19 to $4.15

(Source:  TheEdgeSingapore February 19 2018)