Brokers' Digest April 16 2018

AEM Holdings (April 11: $6.29)

•          Maintain ADD.  As at April 1, AEM said its sales orders received for delivery in FY2018 increased to $192 million.  This represent a rise of 67% over the last sales order update of $115 million on Feb 1, and a 30% incrase over the sales order of $148 million received on April 1, 2017 for delivery in FY2017
•           AEM highlighted that sales could seasonally peak in 2QFY2018 and 3QFY2018
•           Price target of $8.19, based on 10x (15.3% discount to sector average) FY2019F EPS

Cromwell European Real Estate Investment Trust (April 11: €0.60)

•          Buy (initiating coverage).  With an improving European economy, CERT is well positioned to benefit from an uplift in rents.  In addition, with European property yield spreads being above the historical 10-year average, CERT is poised to gain from increases in property values
•           While there is a lack of familiarity with CPG by some investors, we believe well-known real estate fund manager ARA Asset Management’s taking a 19.5% interest in CPG should give investors confidence in CPG’s execution capability
•           DCF based price target of €0.63

Frasers Commercial Trust (April 11: $1.44)

•          Upgrade to Buy.   While Grade-A CBD Core landlords in Singapore are the immediate beneficiaries from the broader office recovery, we believe that their Grade-B CBD Core peers should also enjoy some upside, albeit belatedly
•           Separately, we believe FCOT’s FY2018F yield of 7% is still quite a distance away from the 5.5% yield seen during the start of the last rental recovery cycle in 1HFY2013
•           Fair value estimate of $1.51

Genting Singapore (April 11: $1.13)

•           Maintain Buy.  Since Genting Singapore reported 4QFY2017 Ebita fell 20% q-o-q, its share price has tumbled 14%
•           Currently, Genting Singaporeis tarding at only 9x FY2018 enterprise value/Ebitda or -1 standard deviation to the 12-month forward EV/Ebitda mean.  The last time the sotck traded at these valuations was when the company suffered larget derivative losses, foreign-exchange losses and impairments of trade receivables
•           Unchanged price target of $1.46, based on 12x FY2018 EV/Ebitda

Moya Holdings Asia (April 11: 9.9 cents)

•           Maintain Buy.  Moya’s founding shareholder, Moya Holding, sold out its stake.  First, it did so to its majority shareholder, Tamaris Infrastructure, on Jan 25 at 10 cents a share.  It followed with sale to Gateway Partners on April 6 at 11 cents a share or a 10% permium
•           With further cost savings, volume expansion and the recovery of its non-revenue water providing strong organic growth and possibly additional acquisitions in the pipeline to further boost its earnings we think the outlook is bright for Moya
•           Unchanged price target of 15 cents

Perennial Real Estate Holdings (April 11: 86 cents)

•           Buy.  PREH has announced that that group has entered into a 40:60 joint venture with Qingjian Group to develop a freehold residential site of up to 720 units, with a gross development value of up to $1 billion
•           While Qingjian can be seen as sharing the project risk with PERH, we do note that the consortium has placed two bids for the Holland Village Government Land Sales site.  If awarded, it will add significant exposure to the Singapore property market
•           Price target of $1.05 (23% upside)

SPH REIT (April 11: 98.6 cents)

•           Hold.  Our forecasts are unchanged for SPH REIT, following 2QFY2018 results that were in line with our expectations and consensus
•           We estiamate a potential Seletar Mall acquisition adds 10% to 12% to FY2018DPU, assuming the purchase of a 100% stake that is fully debt-funded, given its low gearing of 25.4%
•           SPH REIT is looking to firm up strong local partnerships in Australia as it focuses on overseas diversification
•           Dividend discount model-based price target of $1

StarHub (April 11: $2.29)

•           Upgarde to Hold.  Starhub adopted the new revenue recognition standard Singapore Financial Reporting System (I) 15 effective from Jan 1, with full retrospective approach for active contracts from January 2017
•           Having corrected about 20% YTD (April 9, 2018 close), Starhub’s share price in the near term will be supported by a decent 7% forward yield
•           Unchanged fair value of $2.20

Wilmar International (April 11: $3.18)

•           Maintain Buy.  China has retaliated against the US imposition of tariffs on its exports, by imposing 25% tariff on soybeans imported from the US.  If the tariff takes effect, the long-term impact on Wilmar will be negative-to-neutral
•           Price target of $3.45 (12% upside) on Wilmar, as the group may see some short-term upside with the decline in soybean future prices

(Source:  TheEdgeSingapore, April 16 2018)