Brokers' Digest 26 Feb 2018

Avi-Tech Electronics (Feb 21: 50.5 cents)

- Maintain BUY

- Avi-Tech reported great 1HF2018 results, with revenue growing 19.5% y-o-y and operating income surging 14.9% y-o-y.

- We remain positive on Avi-Tech's outlook, which is likely to benefit from increased electronics in the automotive sector

- DCF based price target of 59 cents (23% upside).  This implies a 12xFY2018F PER.  It also provides an attractive FY2018F dividend yield of 6.9%

Far East Hospitality Trust (Feb 21: 72.5 cents)

- Maintain BUY

- Far East Hospitality Trust's results were within expectations

- We continue to see 2018 as a period of recovery from this low base, though we tweak our RevPAR growth rates for FY2018 downwards. 

- After adjustments, our fair value decreases from 77 cents to 75 cents

Lippo Malls Indo Retail Trust (Feb 21: 39 cents)

- Downgrade to Hold

- Lippo Malls Indo Retail's Trust's 4Q2017 results were within expectations.

- We recognize that the negative sentiment related to a potential rights issue will continue to weigh on the trust, as investors may be unwilling to accumulate additional units in the interim.

- We have decided to apply a 10% haircut to arrive at a fair value of 40.5 cents, down from previous fair value of 46 cents

Oversea-Chinese Banking Corp (Feb 21: $13)

- Maintain Add

- FY2017 net profit was in line with consensus

- Similar to peers, OCBC took advantage of the upcoming FRS 109 and cleaned up its oil and gas loan book

- We raise our FY2018-2019F EPS by 3.3% to 6.1% on higher non-NII and lower credit costs.  A higher Gordon Growth Model based price target of $14

Roxy-Pacific Holdings (Feb 21: 57 cents)

- Maintain Buy

- We believe Roxy, being one of the earliest to landbank in the current market cycle, has six free-hold residential developments in Singapore that will be ready for launch in 2018, with two to three to be launched within 1Q2018

- Price target of 69 cents is based on a 30% discount to RNAV of 98 cents

Singapore Airlines (Feb 21: $11.29)

- Maintain Hold

- Singapore's Finance Minister announced in Budget 2018 that all facilities producing 25,000 tonnes or more of greenhouse gas emissions in a year will have to pay carbon tax from 2020

- In our view, the most direct impact will be higher fuel costs, as producers of jet fuel are likely to pass on the cost of carbon tax to the airlines.  We believe the impact will be mitigated for two reasons: an active fuel hedging strategy helps reduce volatility of fuel costs, and in progress renewal of fleet to more fuel efficient aircraft such as the A350s

- Unchanged fair value of $10.85

StarHub (Feb 21: $2.55)

- Maintain Fully Valued

-  4Q2017 service revenues of $571.7 million were in line with expectations

- On valuation, StarHub is expensive at a forward PER of 21x (versus sector average of 15x) and 10.2x EV/Ebita (versus sector average of 8.5x)

- While StarHub maintained an annual DPS of 16 cents in 2017 (5.6% yield), its annual DPS could be cut to 14 cents in FY2019F.  DCF based price target of $2.20

Thai Beverage (Feb 21: 83.5 cents)

- Maintain Hold

- 1QFY9/2018 core net profit of THB5.3 billion was below expectations at 18.8%/18.3% of our/consensus FY2018 estimates

- We cut FY2018-FY2020F EPS by 0.6% to 1.7%, as we factored in higher selling expenses

- A lower sum of the parts (SOTP)- based price target of 98 cents (from $1) as we revalue ThaiBev's stake in Sabeco

United Overseas Bank (Feb 21: $27.60)

- Maintain Buy

- UOB's FY 2017 net profit came in at $3.4 billion (+9% y-o-y)

- We have made marginal tweaks to our FY2018-FY2019F earnings after incorporating actual FY2017 numbers.

- Our price target of $29.50 is based on the Gordon Growth Model, equivalent to 1.3x FY2018 P/BV, almost at its 10-year average P/BV multiple

(Source:  TheEdgeSingapore February 26 2018)