| MAYBANK KIM ENG | UOB KAYHIAN |
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Singapore Exchange Ltd (SGX SP) Multi-Asset Strategy On Track
1H18 in line; EPS and TP raised 1H18 core PATMI of SGD179.1m (+4.5% YoY) was in line with our estimate at 49% of our previous FY18 forecast. The interim dividend of SGD0.05/sh was also in line with our expectation. We raised our FY18-20E EPS by 3- 8%, mainly due to higher derivatives revenue, partly offset by the decline in equities and fixed income revenue from lower post trade services. With the change in EPS, we raised our TP by 6% to SGD8.82, based on an unchanged P/E of 23x FY19E EPS, in line with its mean since 2012.
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Frencken Group (FRKN SP) Proxy to EU Recovery At A Bargain
A high-tech manufacturer with a diversified portfolio of blue-chip customers in various industries, Frencken represents an excellent proxy to Europe’s economic recovery. At current prices, this “mini-Venture” is available at bargain prices. We believe its recent disposal of PESB is a positive and its 20% earnings CAGR momentum will continue into 2019. Initiate coverage with BUY and PE-based target price of S$0.79 based on peers’ average of 12.3x 2018F PE and 3.8% 2018F yield.
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| CIMB SECURITIES | PHILLIP SECURITIES |
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China Sunsine Chemical Holdings Rubber chemicals specialist
■ Sunsine trades at 5.1x CY18F ex-cash P/E, at a 48% discount to its Chinese rubber chemicals peer Shandong Yanggu Huatai Chemical. ■ ASPs for accelerator products rose 25% yoy in 9M17 amid crackdown on pollution in China. ■ Boost in production capacity to kick in by 1H18F, fuelling 7% growth in total capacity. ■ Earnings have tripled since FY13, and we believe the company is set for continued earnings growth as the industry consolidates. ■ Initiate coverage with Add and a TP of S$1.50, based on 9.8x CY19F P/E (20% discount to global peers’ average
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Cache Logistics Trust Fuelled and ready SINGAPORE | REAL ESTATE (REIT) | FY17 RESULTS
FY17 gross revenue in line with our estimate FY17 DPU 5.6% lower than expected due to temporary retention of $1.9mn from 51 Alps Ave rental top-up, pending assessment for tax treatment 4Q17 DPU of 1.597 cents to be paid on Feb 27 (4Q16: 1.770 cents) Announced the divestment of 40 Alps Ave for $73.8mn, at 7% above valuation Upgrade to Accumulate; higher target price of $0.92 (previously $0.82)
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DBS VICKERS |
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Keppel Corporation: Accumulate on dips
According to The Business Times, Keppel Offshore & Marine is looking to offload six jack-up rigs for up to US$960m to Oslo-listed Borr Drilling, translating to US$160m per rig. If successful, this is positive on Keppel’s cash flows and will improve its balance sheet. The group will be reporting its FY17 results on Thursday, and as mentioned in our earlier report on 26 Dec 2017, it will book its provision for the S$570m fines in the upcoming results. Hence a quarterly net loss for 4Q is expected. Beyond that, we expect asset disposals such as Keppel China Marina, other asset recycling initiatives in the real estate segment and possibly the above-mentioned six rigs to provide a boost to the bottom-line. Do note that K1 Ventures has also proposed for a voluntary liquidation, and there could be further cash inflows for Keppel Corp. Should there be potential price weakness following the 4Q results, longer-term investors may consider accumulating on dips. Meanwhile, with improving valuations in SG and HK-listed property names, we increase our P/B for the property segment, as well as for the O&M segment due to recovering oil prices. As such our FV estimate rises to S$9.32. Maintain BUY.
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