ANALYSTS SAY: Buy, Sell, Hold (20 June 2017)

Raffles Medical Group

Not yet at the bottom

 Even after a c.5% share price retreat since its uninspiring 1Q17 results, RFMD is still trading at 25.8x CY18 EV/EBITDA, above peers’ 19x and its 10-yr mean of 20x.

 As valuations are still lofty, we do not think we are at the bottom yet.

 We see risks coming from: 1) cost pressures from Singapore hospital extension, 2) additional costs from China in 1H18, and 3) lacklustre domestic operations.

 Accordingly, we cut our FY18-19F EPS by 9-16% to factor in Chongqing hospital. This lowers our SOP-based TP to S$1.25. Maintain Reduce.

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CapitaLand Mall Trust

Time to catch up

Attractive valuation. BUY, TP S$2.17.

CapitaLand Mall Trust (CMT)’s share price has been flat this year, which has lagging behind both S-REIT index (up 13.9% YTD) and Singapore 10Y government bonds which is down by 30bps to 2.08% since the start of the year. We believe the underperformance is due to investors’ concerns on potential downside earnings risk given the weak operating outlook but we believe these risks are priced in at current levels. Yields spread of close to 3.7% against the 10-year government bond is at its five-year -1 standard deviation (S.D.) level, implying that the yield spread will converge to its long-term mean of 3.3%. BUY!

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 OCBC

Golden Agri-Resources: Positive long term initiative

In line with efforts to increase productivity, Golden Agri-Resources’ subsidiary PT SMART Tbk now has two clones of high-yielding oil palm planting material that are envisaged by the company to potentially increase yields to above Indonesia’s industry average yields. Over the next five years, the group will cultivate a sufficient quantity to plant over a larger commercial area starting in 2022. This longer term development is particularly important, in view of their estates’ average age of ~16 years (including plasma), which is considered to be one of the oldest among plantation peers. Replanting activities with higher-yielding seeds are thus expected to remain a key focus to keep a favourable age profile and sustain production growth. For the nearer term, OCBC Treasury Research believes a slowdown in palm oil demand coupled with high palm oil supplies may cap prices to their year-end forecast of MYR2,650/MT. As near term catalysts are few and we believe the stock is still sensitive to CPO prices, we are keeping our HOLD rating and FV estimate of S$0.38.