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)

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)