ANALYSTS SAY: Buy, Sell, Hold (25 Oct 2016)

Raffles Medical Group Results first take: slowing topline growth hints at weakening demand

■ 3Q/9M16 net profit (+4% yoy) largely in line, forming 96%/95% of our 3Q/9M forecasts. 9M16 formed 66% of our FY16F (below historical average of 69%).

■ Profitability is still dragged down by new expansion projects with ramp-up slower than expected. 3Q OPM (15.6%) down qoq and yoy (2Q16: 16.8%, 3Q15: 18.2%).

■ We maintain our forecasts and target price pending this morning’s analyst briefing.

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Raffles Medical Group Ltd New medical centres gaining traction; MCH continues to lag SINGAPORE | HEALTHCARE | RESULTS

 9M16 Revenue/PATMI came in at 77.1%/ 63.7% of our FY16 forecasts respectively

 RafflesMedical Centre Orchard and Raffles Holland V to breakeven in coming quarters

 Staff costs compressed operating margin, and may not revert in near term as RMG gears up for its expanding business operations

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CapitaLand Retail China Trust: Hit by SGD strength

CapitaLand Retail China Trust’s (CRCT) 3Q16 results were impacted by a stronger SGD against RMB. NPI in RMB terms was 0.6% higher YoY at RMB 161.3m, or 7.4% higher YoY if the change in Beijing’s tax policy was stripped out. Nonetheless, NPI in SGD terms fell 6.9% YoY to S$35.8m. Distributable income fell a corresponding 7.7% YoY to S$20.6m, with DPU dropping 10.6% YoY to 2.36 S cents. We note that leasing momentum has picked up at Minzhongleyuan, with occupancy increasing to 80.1% from 70.5% as at end 2Q16. Chengdu Galleria is to start contributing to portfolio performance from 1 Oct 2016. We keep our Buy rating and fair value of S$1.67 under review pending more details.

Raffles Medical Group (RFMD SP) Steady results; Positive

NDR 3Q16 in line, expect better 4Q; NDR well-attended

Raffles Medical’s results were in line; 9M16 met 66% of our FY16E. 3Q16 revenue increased 18% YoY or 8% excluding the contribution from newly acquired MCH. Earnings rose 4% YoY or 9% if excluding the loss from MCH. We expect a stronger 4Q, supported by rental income from Holland Village Mall and continued ramp up of medical centres. Key takeaways from MKE-hosted NDR:

1) local operations remain stable, backed by various expansions;

2) MCH is integrating well; an enlarged platform provides greater value for corporate clients;

3) positive on China.

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Plantation Companies

Approaching bottom

 Global palm oil output is set to expand 8% next year; after shrinking 5% this year

 But price should be supported by biodiesel blending in Indonesia on jump in export levy collection

 CY16F-18F palm oil prices (US$/MT, FOB) trimmed 1- 2% on lower expected soybean oil prices

 Upgraded to Neutral. Top picks: AALI, TSH, IFAR (upgraded to BUY), and BAL (maintained BUY)

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