| MAYBANK KIM ENG | UOB KAYHIAN |
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Singapore Telcos Game of Phones
We initiate coverage with a negative view The Singapore telecom sector has not fully priced in the impending entry of new competition into the market. Our baseline assumption of competition leading to higher retention costs, partly through new smartphone launches leading to a higher rate of recontracting, and modest ARPU pressure results in FY18/FY19 core profit expectations that are 11-38% lower than FactSet consensus for FY18E-FY19E. We initiate with SELL on StarHub (STH SP, TP SGD2.17) and M1 (M1 SP, SGD1.59) and HOLD on SingTel (ST SP, SGD3.83).
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Singapore Telecommunications (ST SP) Growing Nicely In Emerging Indonesia And India
Singtel will benefit from growth in Indonesia and India. Telkomsel enjoys doubledigit organic growth in subscriber base and a continued surge in usage of data. Bharti Airtel should experience a recovery in FY19 due to the massive industry consolidation. Inclusive of special dividend from divestment of NetLink Trust, Singtel provides an attractive dividend yield of 7.2% for FY18 and 5.2% for FY19. Maintain BUY recommendation and target price of S$4.53.
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| CIMB | |
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Offshore & Marine Chapter closed for Seadrill, for now
■ SMM and MMT are exposed to Seadrill. Despite Seadrill’s chapter 11 filing, SMM’s standstill agreement with Seadrill’s unit is likely to be further extended. ■ MMT’s charter of its three jack-up rigs should continue until expiry in 2019, with risks from financing should they not be part of Seadrill’s restructuring plans, in our view. ■ Maintain Neutral. Our top sector pick is Yangzijiang for earnings growth and orders.
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| OCBC | DBS |
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DBS: Time to buy
DBS’s share price has dropped from a high of S$22.25 to a low of S$20.38 yesterday, a decline of 8.4%. This is higher than the STI or its peers. We expect the strong performance of global and regional markets in 3Q17 to translate into better Non-interest income. The addition of ANZ will also drive its wealth business in 2018, both in terms of assets under management and revenue. Since our previous report in early August, where we recommended re-entry at lower price level, the current price correction has presented an opportunity to accumulate this stock again. At current price, and with a dividend yield of 3.2% (based on increased dividend payout this year), we are upgrading DBS to a BUY. Our fair value estimate remains at S$22.50. |
Keppel DC REIT (KDCREIT SP) Acquisition of Dataplex in Dublin
• Acquisition price agreed at €66.0m (or c.S$101.3m) • Fully funded by debt, pushing FY18 aggregate leverage above 40% after the committed purchase of maincubes (Germany) • We estimate asset’s NPI yield to be 7.5% and FY18F DPU accretion of around 5.5% • TP increased to S$1.44, maintain BUY
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Check out our compilation of Target Prices
