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CIMB Innovalues Ltd Merging onto the highway ■ We believe Innovalues is on track to attain 10-12% FY16-17F sales growth with gross margin improvement to 32.0%, based on our recent check with management. ■ Channel checks with SG-listed peer and read-through from industry happenings support favourable outlook for Innovalues. ■ Ongoing M&A discussion is a near-term catalyst. A historical transaction P/E range of 12-16x would imply a possible valuation range of S$0.91 – S$1.21 per share. ■ Upgrade to Add on higher DCF-based TP of S$1.03 (WACC: 12.9%) as we factor in higher FY16-18F EPS estimates and roll over to FY17F. |
Phillip Securities Keppel DC REIT Strengthening its presence in Europe
Maintain "Accumulate" rating with new higher target price of S$1.29 (previous: S$1.26) Key downside risk to our target price is the capital structure for the acquisition of Keppel DC Singapore 3 (formerly known as T27) and dilutive effect arising from the associated equity fund raising (EFR). Our FY18e DPU is already lower than FY17e DPU because we have assumed an EFR for the acquisition of mainCubes data centre, which will increase the Unitholder base by c.10%.
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OCBC Securities SOILBUILD BUSINESS SPACE REIT | BUY Soilbuild Business Space REIT (Soilbuild REIT) reported its 3Q16 results which came in within our expectations. Gross revenue decreased 4.7% YoY to S$19.7m, while DPU fell 13.9% YoY to 1.399 S cents as a result of an enlarged unit base from its 1 for 10 preferential offering exercise. While we expect a QoQ improvement in Soilbuild REIT’s 4Q16 results, we see the need to lower our FY16 and FY17 DPU forecasts by 2.7% and 2.8%, respectively, largely due to lower occupancy rate assumptions at Tuas Connection and West Park BizCentral. Consequently, our fair value estimate is trimmed from S$0.78 to S$0.77. Maintain BUY on Soilbuild REIT. However, we believe further downside risks to our projections could stem from management’s failure to secure replacement tenants at its 72 Loyang Way property once the security deposit is exhausted next year.
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UOB KayHian Ezion Holdings (EZI SP) Cash Flow Issues Being Addressed But It’s Not Hunky Dory Thereafter Investors were mainly concerned over Ezion’s cash flow and debt refinancing plans. The refinancing, expected to be completed by end-16, would put Ezion in a cash flow neutral position. To mitigate the downturn and its tight balance sheet, Ezion will adjust its 2017-18 capex accordingly and continue pursuing its diversification strategy. Fundamentals point to challenging conditions ahead till at least 2H17. Maintain HOLD. Target price: S$0.30. Entry price: S$0.27. |
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