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Guocoland Strong residential performance
■ 1HFY6/18 core EPS makes up 55% of our FY18 forecast, in line with expectations ■ Strong residential take up for ongoing projects ■ Recurrent income from Tanjong Pagar Centre progressively expanding ■ New Beach Rd site to increase its exposure to office upcycle ■ Maintain Add with a TP of S$2.88
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Alpha Picks: Strong Start To 2018 Reflation And Cyclical Recovery Plays Stand Out
Our alpha picks performed well in January, particularly the reflation and recovery picks. We see further potential upside in our target prices for these stocks. Otherwise, we add DBS and remove Thai Beverage.
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| PHILLIP SECURITIES | OCBC SECURITIES |
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Cache Logistics Trust First uplift after strengthening balance sheet SINGAPORE | REAL ESTATE (REIT) | UPDATE
Acquisition of a portfolio of nine properties in Australia for A$177.6mn (S$188.3mn) Funded by debt and perpetual securities, making it DPU accretive to unitholders Maintain Accumulate; slightly higher target price of $0.93 (previously $0.92)
What is the news? Cache Logistics Trust has announced the proposed acquisition of a portfolio of nine logistics properties with a gross lettable area of 142,103 sqm on the eastern seaboard of Australia for A$177.6mn (S$188.3mn) at an initial net property income (NPI) yield of 6.4%. The logistics properties are in Melbourne, Victoria (6 properties), Sydney, New South Wales (1 property) and Brisbane, Queensland (2 properties). The acquisition is expected to be 0.33 cents DPU accretive on a pro-forma basis over FY17's DPU, after factoring the divestment of 40 Alps Ave. (Proposed divestment of 40 Alps Ave was announced on 18 January.)
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ComfortDelGro: Petrol sales to help offset declining diesel sales
While we highlighted previously that we do not believe the alliance with Uber to be one that is spectacular, we do expect it to help stabilize ComfortDelGro Corporation’s (CDG) taxi operations, particularly with regards to its fleet idle rate. CDG is also reported to be scaling up on its petrol station business1 (Jan 18) this year to serve its growing fleet of hybrid taxis, which we believe makes sense given the change in fleet profile but unlikely to provide much lift to earnings until CDG’s petrol station starts to serve the larger private hire car fleet of Uber, post-approval of the CDG-Uber alliance. Separately, there had been market chatter that Grab is in talks to acquire Uber’s operations in Southeast Asia but Uber has refuted the claims and we advise investors against speculating on such market rumour. Factoring in petrol sales assumption to offset declining diesel sales, we raise our FY18F-FY21F earnings slightly by 1-3%, and increase our FV from S$2.05 to S$2.12. Therefore, based on 1 Feb 18 closing price of S$2.15, we deem CDG fairly valued. Maintain HOLD on CDG.
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DBS VICKERS |
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Chip Eng Seng (CHIP SP)
Expansion in order book and scope from new contract win • Construction order book grows 37% (from S$458.4m at end-3Q17) on new S$168m HDB contract win • Marks CES’ first construction project with a design element, which generally offers higher margins • No material impact on FY18F earnings but medium term earnings visibility improves; provides further support to maintain 4 Scts dividend • Maintain BUY and SOTP-based TP of S$1.18
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Check out our compilation of Target Prices
