ANALYSTS SAY: Buy, Sell, Hold (8 Nov 2016)

Hock Lian Seng Holdings Earnings bottoming in sight

 Hock Lian Seng Holdings’ (HLSH) 9M16 Revenue/Profit After Taxes and Minority Interests (PATMI) met 77%/86% of our forecast

 Gross profit was boosted by a one-off gain from the closure of a few completed construction projects which amounted to c.S$5 million

 We have adjusted our forecast and valuations to take into account of a S$60 million cash inflow from the repayment of loan from the Group’s Joint Venture (JV) company, as well as higher gross margins attained from existing Civil Engineering projects Existing Civil Engineering projects will continue to provide revenue visibility into 2020; Group is unable to sustain dividend payments from the Civil Engineering segment alone

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Valuetronics Holdings Ltd

2QFY17: Riding on the Internet of Things

■ 1HFY17 core net profit was in line at 49%/ 53% of our/consensus FY3/17 forecasts.

■ Product portfolio expanded to include products with connectivity technologies and more electronic components (eg. wireless LED lighting, bathroom goods).

■ Zero debt, net cash/share of S$0.34 at end-Sep 2016 (including AFS). We forecast 7.2% dividend yield for FY17-19F.

■ FY17-19F EPS cut by 1-11% as we adjust for: 1) lower ICE sales growth in FY18- 19F, 2) lower gross margin, and 3) higher labour costs in FY18F.

■ Maintain Add with unchanged TP of S$0.60 (still 8.4x P/E) as we roll over to CY18.

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Yoma Strategic Holdings: Buoyed by FV gains from telco towers stake

Yoma Strategic Holdings’ 2QFY17 PATMI increased YoY to S$8.5m from S$0.3m mainly due to S$14.7m of fair value gains on its stake in its telecommunications tower investment and stronger contributions from the sale of residences/LDR and real estate rental and services. In terms of the topline, group revenues similarly increased 25.2% given growth across the group’s real estate, automotive and equipment, and consumer businesses. We judge this quarter’s results to be broadly within expectations. To recap, Yoma is currently in the midst of spinning off its tourism-related business as part of an RTO of SHC Capital Asia Ltd. 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 into account any shareholding effects arising from any proposed compliance placement of SHC. We highlight that the proposed exercise is subject to condition precedents and further approvals from relevant authorities. Maintain HOLD with an unchanged fair value estimate of S$0.54.

Valuetronics Holdings (VALUE SP)

2QFY17: In Line; Returns To Revenue Growth

After six consecutive quarters of comparable-sales contraction, Valuetronics’ 2QFY17 net profit rose 18.2% yoy to HK$38.1m, driven by higher sales in the consumer electronics segment. Valuetronics is trading at 8.6x FY18F PE (ex-cash: 3.5x) with an attractive potential dividend yield of 6.7%. Maintain BUY and PE-based target price of S$0.60.

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Singapore Banks Post-3Q16:

Focus On Revenue Driving topline growth

Singapore banks are now driving topline growth to offset more provisions that need to be set aside in the face of worsening asset quality. Post- 3Q16, aside from asset quality deterioration, we saw:

1) banks gaining market share in domestic loans/finding new sources of loan growth;

2) falling customer spreads; and

3) higher non-interest income (non-II) and better cost management can cushion overall impact to earnings.

We want to assess the drivers of topline growth for 3Q16.

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