ANALYSTS SAY: Buy, Sell, Hold (26 Oct 2016)

Guocoland

Expect a better 2H

■ 1QFY17 earnings slightly below estimates at 13% of our FY17 forecast.

■ Singapore residential projects continue to see robust take-up.

■ GUOL’s earnings likely to be 2H loaded, with higher Malaysia contributions, new Singapore residential launches and rental income from TPC.

■ Maintain Add with an unchanged target price of S$2.59

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CapitaLand Retail China Trust

Weaker RMB and higher property tax provisions for Beijing properties dented earnings amidst stable mall operations 

 3Q 2016 NPI in RMB terms grew 0.6% y-o-y. RMB weakened against SGD by c.8.1% from 3Q15 to 3Q16.

 New Value-Added Tax (VAT) and property tax provisions also impacted earnings.

 New acquisition Galleria to boost portfolio earnings from 1 Oct 2016.

 We remain positive on China’s retail sales and CRCT’s portfolio of shopping malls.

 Maintain ACCUMULATE with unchanged DDM-derived target price of S$1.62.

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Yoma Strategic Holdings: Spinning off tourism businesses

The group announced that it plans to spin off its tourism-related businesses as part of a Reverse-Take-Over of SHC Capital Asia Limited (SHC) which is listed on the Catalist Board of the SGX. A conditional sale and purchase agreement has been signed for the proposed sale of its tourism-related businesses. After the exercise, Yoma is expected to be issued 167m shares valued at an aggregate of S$43.9m which gives the group a shareholding of 53.5% in SHC before taking in account any shareholding effects arising from any proposed compliance placement of SHC. The group envisions that SHC will be transformed into a Myanmar-focused tourism company to acquire, develop and operate new tourism assets in the emerging economy. We highlight that the proposed exercise is subject to condition precedents and further approvals from relevant authorities

Sembcorp Marine Ltd.
Maintain NEUTRAL
Swings into loss of S$22 mn in 3Q16

Target Price: $1.20

● Sembcorp Marine swung into an unexpected loss off S$22mn in 3Q16, driven by a decline in operating margin to 3.7% from 6.6% in 3Q15. This is further exacerbated by a widening in associate losses to S$28 mn, due to provisions by Cosco Shipyard.

● With no further orders secured in 3Q16, Sembcorp Marine's net order book excluding Sete Brasil fell to S$5.2 bn. To manage costs, headcount has been reduced by 8,000, representing 22% of peak workforce. Sembcorp Marine will also be returning two mid-sized yards to the government following the completion of Tuas Boulevard Yard Phase 2 in 2017.

● As expected, net gearing fell to 1.03x in 3Q16 from 1.11x in 2Q16, driven by operating cash flow of S$796 mn generated from project deliveries, including the Noble Lloyd Noble jackup. Management expects working capital and capex requirements to fall in 2017.

● We lower our 2016-18 EPS by 21-46% due to lower new orders
and margin assumption. Sembcorp Marine is currently trading at P/B of 1.1x. Maintain NEUTRAL.

Ascendas India Trust

BUY

Still under the radar Still has legs to run. We maintain our BUY call on Ascendas India Trust (a-iTrust), with a revised TP of S$1.13. While a-iTrust has rallied over 30% since we upgraded the stock to BUY in late January, and investor interest has picked up, we believe aiTrust’s growth story still has yet to gain recognition among investors at large. With Singapore-focused REITs increasingly facing headwinds translating into slowing DPU growth (average DPU CAGR of 1%), we anticipate investors will gravitate to aiTrust given its healthy 2-year DPU CAGR of 8% and a still decent 5.5% yield.

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