Brokers' Digest April 9 2018

 CapitaLand Retail China Trust (April 3: $1.57)

•         Upgrade to Buy.   As at the closing price on March 27, CRCT is trading at a 6.8% FY 2018F yield.
•           Going forward we expect retail sales growth in China to remain healthy for both online and offline stores
•           We have kept our forecasts for CRCT largely intact and our fair value remains at $1.66

ComfortDelgro Group (April 3: $2.05)

•           Maintain Buy.  Grab announced that it had acquired Uber’s Southeast Asia operations and Uber will take a 27.5% stake in Grab.
•           We are keeping our earnings forecasts for now, as the situation remains fluid and we had not factored in the potential upside from the proposed ComfortDelgro and Uber alliance
•           Our price target of $2.25 is based on a long-term 10 year PER average of 16.6 x

Dairy Farm Int’l Holdings (April 3: US$8.13)

•           Maintain Buy.  We turn more positive on DFI’s recent deal with Robinson’s Retail Holdings (RRHI) to spin off Rustan Supercenter for an 18% stake in RRHI.
•           We see earnings turnaround going forward, as a stock catalyst and swapping Rustan for RRHI shares are part of this process.
•           Our price target of US$9.77 is derived from the sum-of-the-parts valuation methodology

M1 (April 3: $1.74)

•           Upgrade to Hold.  Following TPG’s teaser announcement on March 19 to offer free SIMs, unlimited voice and 3GB/month data for senior citizens for 24 months, the Singapore focused M1 share price has de-rated by 2% and has underperformed the Straits Times Index (STI) by 25% on a 12 month basis
•           We assume M1’s wireless service revenues will decrease by a 3% compound annual growth rate over 2017-2020E.
•           Price target of $1.63

Mapletree Greater China Commercial Trust (April 3: $1.16)

•           Upgrade to Add.  MAGIC announced it is acquiring a 98.47% stake in a portfolio of six Japan commercial properties from MFOJ, a private real estate fund managed by its sponsor
•           We tweak our FY2019-2020F DPU estimates up by 0.4% to 2% to include the new contributions
•           Our dividend discount model-based price target is lifted to $1.30, with the additional income and a change in our blended cost of equity to 8.5% (from 8.9% previously)

Sembcorp Marine (April 3: $2.20)

•           Maintain Buy.  Sembcorp Marine has announced that it has secured the engineering, procurement and construction contract for the hull and living quarters of a new build floating production, storage and offloading vessel from Energean’s engineering, procurement, construction, installation and commissioning contractor – Technip FMC
•           We believe the order flow could be stronger than expected, given the robust pipeline
•           Price target of $2.90, based on 2.4x FY2018 P/BV

Sheng Siong Group (April 3: 94.5 cents)

•           Buy.  Excessive concerns about e-commerce disruptions led to Sheng Siong Group’s (SSG) 12 month underperformance of 10% against the STI
•           We expect 4% y-o-y revenue growth for FY2018E.  We resume coverage with a “buy” rating, expecting catalysts from: (1) further improvements in consumer spending, (2) SSG’s further market share wins from convenience stores and traditional market grocers (3) a potential surge in new stores in 2018 and (4) continued good sets of results, supporting high ROEs and dividends
•           Our DCF price target is $1.20

Tianjin Zhongxin Pharmaceutical Group (April 3: 99.5 US cents)

•           Buoyed by strong margin expansion, TJZX 4Q2017 Patmi surged 63.7% y-o-y to RMB118.2 million, bringing full year Patmi to RMB473.3 million, which is a 4.5% above our forecast
•           We tweak our 2018-2019 attributable net profit to RMB569.4 million and RBM670.6 million, respectively
•           Price target of US$1.66, pegged to peers’ average of 14.1x2018F PER and based on an exchange rate of RMB6.29 per US$

Y Ventures Group (April 3: 57.5 cents)

•           Buy (initiating coverage). Y Ventures Group distributes products from third party brands over some of the largest e-commerce platforms across 10 countries
•           YVEN stands out for its provision of value-added data analytics service to brand partners, allowing them to adapt their products to the market needs.
•           Ebita projected to grow at 92% CAGR over FY2018F-FY2020F.  Price target of 77 cents, based on 20x FY2019F enterprise value (EV)/Ebitda, at a 15% discount to larger peers’ 23x, owing to YVEN’s smaller scale.

(Source:  TheEdgeSingapore April 9 2018)