| CIMB | MAYBANK KIM ENG |
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Sembcorp Industries No major shocks ■ 3Q16 net profit of S$54m (-48% yoy, -38% qoq) was a miss, taking in SMM’s share of losses in Cosco. 9M16 net profit formed 57% of our and consensus forecasts. ■ No major negative surprises for utilities. Its 3Q16 profit was slightly ahead of our forecasts, lifted by higher Singapore pool prices and provision write-back in China. ■ The low spot power prices in India could continue to stall the second long-term PPA to be signed by SGPL. ■ TPCIL turned profitable in 3Q16 on higher utilisation as teething issues resolved. ■ Maintain Hold as there are no firm catalysts for now. We would turn more bullish on 1) sustainable increase in India’s spot power prices, or 2) signing of PPA for SGPL. |
Singapore Post Ltd (SPOST SP) Green Light for Alibaba Deals JV completed and second investment approved SingPost has completed its joint venture agreement with Alibaba (BABA US; CP 102.78; BUY) that provides a 34% stake of its subsidiary, Quantium Solutions, to the latter. Also, it has obtained regulatory approval for Alibaba to raise its stake in SingPost to 14.4% at SGD1.74/sh. The placement is expected to be completed by 28 Feb 2017. There were no changes to the original terms. These developments should remove the overhang on the stock and potentially enable SingPost to capture more ecommerce logistics businesses from Alibaba. We have not adjusted our forecasts for the share dilution and cash infusion pending clarification of more details. Maintain BUY and TP of SGD1.77 (WACC 8.7%, LTG 1%). |
| OCBC SECURITIES | |
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ComfortDelGro: Singapore bus business unaffected by fare cut
Rail fare revenue to fall by S$8.9m Maintain BUY on slightly lower FV The Public Transport Council of Singapore (PTC) announced yesterday that transport fares will be reduced by 4.2% from 30 Dec 16. While the fare adjustment formula, which takes into account wages, core inflation and energy costs, yielded a maximum fare adjustment quantum of -5.7%, PTC has decided to transfer the rest of the -1.5% quantum to next year's fare review exercise, to spread out the impact of volatile energy prices over time. In addition, fares for fullyunderground lines [i.e North-East Line (NEL), Circle Line and Downtown Line (DTL)] will be reduced to the same level as above-ground options (i.e North-South and East-West Lines, LRT and buses). Currently, fare differential exists as it was introduced in 2003 with the opening of NEL to take into account its higher operating costs. Going forward, all rail fares will adopt a purely distance-based approach, with fares based on shortest travel path. ComfortDelGro’s (CDG) 75%-owned subsidiary, SBS Transit, operates NEL and DTL, which are both fullyunderground rail lines. Lower FV from S$3.10 to S$3.09 As we factor in the fare reduction in FY17, our DCF-derived FV decreases slightly from S$3.10 to S$3.09. With the recent weakness in share price, and supported by a decent 3.6% forward dividend yield, maintain BUY on CDG.
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| PHILLIP SECURITIES | DBS VICKERS |
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Oversea-Chinese Banking Corp Performance boosted by Non-interest Income SINGAPORE | BANKING | RESULTS 3Q16 NPAT increased 6% y-o-y to S$992mn, driven by 25% y-o-y increase in non-interest income y-o-y. Net interest income declined 6% y-o-y on the back of lower NIM at 1.62% compared to 2Q16 NIM of 1.68% (3Q15: 1.66%) and 1.9% decline in loans. NPL was higher y-o-y at 1.19% (3Q15: 0.88%). Maintain "NEUTRAL” with a higher target price of S$8.25 (previously S$8.14), pegged at unchanged 0.95x FY16F book value (excluding preference shares).
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Japfa Ltd Firing on all cylinders Delivering growth. Japfa Ltd (JAP)’s FY15-18F EBITDA CAGR of 19% justifies our implied 6.3x forward EV/EBITDA multiple. The stock trades at a significant discount to its Indonesian-listed subsidiary Japfa Comfeed Indonesia (JPFA) despite delivering decent earnings growth from China, Vietnam and Myanmar, where per capita demand for dairy, animal protein and branded consumer foods is still rising.
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