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SIA Engineering Company Ltd

Not cleared for take-off

 S$264.8mn revenue missed our expectations of S$274.0mn by 3.4%

 S$35.5mn PATMI missed our expectations of S$38.4mn by 7.6%

 Interim dividend of 4.0 cents, lower than previous year's 6.0 cents

 Work content expected to be low, even when work volume picks up

Maintain "Reduce" rating with lower target price of S$3.28 (previous: S$3.39) While work volume is expected to pick up in 2017, we believe work content will be lower compared to historical. This is due to better technology, which has led to better airframe and engine reliability. We have lowered our FY17/FY18 recurring PATMI by 5.1%/5.9%.

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Healthcare - Overall Insurers are footing the bill

■ IP penetration has increased significantly and now covers c.2/3 of the Singapore resident population, driving up the private sector’s market share.

■ A better insured population has a big impact on private hospitals. We estimate insurance payments make up more than 60% of revenue for both RFMD and IHH.

■ The industry is considering removing riders to prevent overconsumption, but we do not view this as a big threat to private patient volumes.

■ Improved public healthcare infrastructure potentially poses a bigger threat, especially in a weak macro climate where patients trade down.

■ We remain Neutral on large cap healthcare. Cost pressure is the key concern.

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OUE Limited: Strong execution, strong results

 3Q results broadly in line

 Boost from CPEX sale to OUEHT

 Focused on OUE Downtown AEI

Significant earnings boost from CPEX divestment

OUE reported 3Q16 PATMI of S$107.6m, up significantly YoY from S$15.0m in 3Q15, mainly due to divestment gains from the sale of the Crowne Plaza Changi Airport Extension (CPEX) to OUE H-REIT in Aug 2016, firmer sales at OUE Twin Peaks and also stronger numbers from the Property Investments Division. Accounting for one-time items, we judge this quarter’s numbers to be in line with expectations. After active marketing effort and the implementation of a deferred payment scheme, the group has enjoyed significant success at selling units at OUE Twin Peaks, which by now has over 268 units sold (out of 462 total units) as at end Sep 2016. Looking ahead, management reports that it remains focused on asset enhancement works at OUE Downtown and active lease management at US Bank Tower. Maintain BUY with an unchanged fair value estimate of S$2.17.





Mobile, pay TV declines hit bottom line

• 3Q16 net profit of S$86m (-28% y-o-y, -21% q-o-q) was 4-5% below our expectations

• Declines in mobile, pay TV, grants hurt bottom line

• Lower grants to impact FY17F further

• Maintain FULLY VALUED with a TP of S$ 2.80.

What’s New Weak service revenue and lower grants hurt results. 3Q16 net profit of S$86m (-28% y-o-y, -21% q-o-q) was lower than our S$90m-95m expectations. Lower revenues from mobile and pay TV, coupled with reductions in adoption grant, resulted in a weaker bottom line. Lack of one-off gains (S$15m in 3Q15, S$9.5m in 2Q16) also contributed to the profit drop. Excluding one-offs, net profits would have been 17% and 13% lower y-o-y and q-o-q respectively.

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LionelLim8.16Check out our compilation of Target Prices

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