| CIMB | MAYBANK KIM ENG |
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Singapore Exchange Impressive cost management but partially one-off ■ SGX’s 1Q net profit of S$83.1m was in line at 102%/23% of our 1Q/FY17 forecast. ■ Securities revenue fell 1% qoq and 16% yoy on lower securities average daily value traded (ADVT) of S$988m (-3% qoq, -19% yoy). ■ Derivatives revenue fell 5% qoq and 22% yoy on fewer contracts traded (-6% qoq, - 24% yoy), partially offset by higher average fee per contract. ■ Expenses were well managed but we expect them to rise in 2QFY17. ■ Maintain Reduce. Our DDM-based target price falls to S$7.04 as we cut our FY17F- 19F EPS by 3-4% and DPS by 1 Sct. |
CapitaLand Commercial Trust (CCT SP) Golden Shoe’s Value Creation In line; maintain BUY & SGD1.81 TP 3Q16 results met, with 9M16 DPU at 76% of our FY16E. CCT has submitted plans to redevelop Golden Shoe into a commercial building. We view this positively as it should allow CCT to capture a potential recovery in the office market when the building is completed in 2021. Maintain BUY and SGD1.81 TP, at a target yield of 5.0%. CCT is our top sector pick as we find its forward yields of 5.7% attractive considering its strong WALE of 6.8 years and DPU growth from its acquisition of CapitaGreen. Furthermore, unlike distributions for its office peers that are supported by non-core capital distributions, CCT’s reflects the underlying fundamentals of its properties. |
| OCBC INVESTMENT RESEARCH | |
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First REIT: Steady growth in 3Q16 First REIT (FREIT) reported a steady set of 3Q16 results which met our expectations. Gross revenue rose 6.5% YoY to S$26.9m, while DPU increased by 1.9% YoY to 2.12 S cents. FREIT carried out its maiden S$60m subordinated perpetual securities issuance on 8 Jul this year as a means of diversifying its sources of funding. The perpetual securities come with a fixed distribution rate of 5.68% per annum for the first five years up to 8 Jul 2021. Proceeds raised were used to pare down FREIT’s bank borrowings, thus lowering its gearing ratio from 34.1% (as at 30 Jun 2016) to 29.7%. Looking ahead, FREIT will continue to source for yield accretive acquisitions given its increased debt headroom. We finetune our assumptions but our fair value estimate remains unchanged at S$1.36. Maintain HOLD on FREIT, with the stock trading at FY16F and FY17F distribution yield of 6.2% and 6.0%, respectively.
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| UOB KAY HIAN | KGI FRASER |
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AVI-TECH ELECTRONICS LIMITED (AVIT SP) Out Of The SGX-ST Watchlist With A Significant Cash Pile AVIT is a Singapore-based company listed on the SGX mainboard. Incorporated in 1981, AVIT provides solutions for burn-in services, burn-in board manufacturing and PCBA and engineering services for the semiconductor, electronics and life sciences industries. The company has a net cash and equivalents position of S$28.3m (S$0.165 per share or about 57% of market capitalisation) as of 30 Jun 16. As of 16 Sept 16, the company received the in-principle approval for removal from the SGX watchlist.
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AP Oil New JV. AP Oil announced (18 Oct) that it has signed a JV agreement to subscribe to a 12.5% equity stake, at RMB25m (c.S$5.15m), in a JV company involving Shenzhen-listed Zongshen Power Machinery (70%), SGX-listed MoneyMax Financial Services (12.5%) and Free Trade Port Co. (5%). The JV co. will provide financial leasing services through hire purchase contracts with companies in Chongqing. The JV co. will be run by Zongshen, with AP Oil, MoneyMax and Free Trade Port each allowed a director seat out of a board of seven. According to AP Oil, there is a lack of hire purchase companies in Chongqing and that in order to be granted a license to conduct such a business in Chongqing, 25% foreign ownership is first required.
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