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UOB KayHian Venture Corporation (VMS SP) Steady And Smooth Execution, Unruffled By Geopolitical Uncertainties Venture’s execution is tracking slightly ahead of expectations as we move into the seasonally stronger 2H. The shift towards test & measurement and medical/life science products, which are gaining wider applications in food safety, environmental analysis and medical diagnostics, would have a positive impact on margins. Customers are also attracted to Venture’s Malaysia operations, which offer cost-competitive EMS. Maintain BUY with a higher target price at S$10.30
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OCBC Securities SG Hospitality: Trading at ~7% yield 8th top destination for outbound Chinese Grand Prix attendance ~15% lower Maintain NEUTRAL on sector Singapore was the 8th top destination globally for outbound Chinese tourists in 2Q 2016, behind destinations such as Thailand, Korea, and Japan. Large-scale events here have increasingly been catering towards Chinese tourists, with Great Singapore Sale’s partnership with UnionPay and the creation of Singapore Golden Week. Going forward, we remain optimistic on STB’s efforts to attract Chinese tourists from Tier 1 and 2 cities. Nonetheless, corporate demand continues to be a concern. Hospitality REITs under our coverage are traded at around 7% FY16/17 forward yield. While operating challenges remain ahead, we find current valuations to be reasonably attractive. We are positive on Ascott Residence Trust (ART) [BUY; FV: S$1.24], and CDL Hospitality Trust (CDLHT) [BUY; FV: S$1.53]. Maintain NEUTRAL on the sector. |
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OCBC SIA Engineering Company: Completed amalgamation of Rolls-Royce JVs SIA Engineering Company Ltd (SIAEC) announced earlier this week the completion of the amalgamation of the JVs it has with Rolls-Royce Singapore (RRS), namely Singapore Aero Engine Services Pte Ltd (SAESL) and International Engine Component Overhaul Pte Ltd (IECO). SAESL will be the surviving entity. Recall that SIAEC had just earlier this year, completed the divestment of its 10% stake in Hong Kong Aero Engine Services Ltd (HAESL), which is a JV between Hong Kong Aircraft Engineering Company Ltd (HAECO) and RRS. As IECO also overhauls and repairs aero engine components, SIAEC said that the amalgamated company will be able to generate greater operational efficiencies, enjoy better economies of scale and result in potential cost savings through streamlining of business processes. As this amalgamation is not new news and is not expected to have a material impact on SIAEC’s FY17 financials, we keep our forecasts unchanged for now. |
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