ANALYSTS SAY: Buy, Sell, Hold (20 Apr '18)

Oversea-Chinese Banking Corporation (OCBC SP)

1Q18 Results Preview: Credit Costs Normalise Downwards To Pre-Oil & Gas Levels

We expect OCBC to report robust loan growth of 7.9% yoy and 2.2% qoq in 1Q18 due to positive business sentiment and strong demand from the corporate sector. NIM continues to expand as SIBOR and SOR march higher steadily. We expect fee income to grow 4.6% yoy despite a high base in 1Q17, driven by wealth management. Credit costs should normalise downwards to levels prior to the crisis from the oil & gas sector.

Maintain BUY and target price of S$16.02, based on 1.64x 2018F P/B.

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Keppel Corp

Increasing confidence across key divisions
● Despite a fall in revenue, O&M losses narrowed to S$23 mn in
1Q18. Encouragingly, with S$580 mn of new orders YTD,
orderbook has grown further to S$4.3 bn from S$3.9 bn in 4Q17.
Management sees rising confidence in O&M, and expects delivery of Golar Hilli to drive demand for more FLNG conversions.

● With improving Singapore residential sentiment, Keppel Land will be launching its Serangoon project this year and redeveloping Keppel Towers and Nassim Woods to add 500 more units to its landbank. While China sales fell to 190 units in 1Q18, it has kept 2,400 launch-ready units in 2018, should market recover.

● In our view, there is dividend upside with more active capital
recycling, and we expect a dividend yield of 5.0% in FY18 with our EPS forecast which is 21% above consensus.

Maintain OUTPERFORM with improving prospects across key divisions.

Banyan Tree Holdings (BTH SP)

Expecting Stellar 1Q18 Results; Buying Up A Subsidiary On The Cheap

BT’s turnaround story continues as the tourism boom in Thailand fuels expectations of a stellar 1Q18. Putting aside the hidden value in LRH, the enlargement of BT’s stake in LRH represents a steal as BT is only paying 54 S cents on the dollar for LRH’s NAV. Also, the deadline for Accor/Vanke to exercise their options (at 15% premium) creeps closer. We tweak earnings upwards due to the increased stake. Maintain BUY and raise our SOTP-based target price to S$1.00.

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Accordia Golf Trust

Teeing off to a new game?

■ We visited four of AGT’s golf courses in Nagoya over 16-17 Apr 2018.

■ Bloomberg consensus projects AGT to record FY3/18F dividend yield of 7.8%, with FY18F P/BV of 0.7x and P/E of 2.3x.

■ Following MBK’s acquisition of AGT’s sponsor, Accordia Golf Co Ltd, management said the former is more willing to approve spending to enhance golf course values.

■ Dividends are derived in JPY and paid in S$. The company engages in short-term hedging on the distribution amount to minimise foreign exchange risk to unitholders

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Keppel Corporation (KEP SP)

1Q18: Below Expectations; China Property Earnings Facing Downside Risk

Keppel reported 1Q18 net profit of S$337.5m, boosted by net gains of S$289m from the divestment of Zhongshan. Excluding this and one-offs, core net profit was S$55m, forming 7%/6% of UOBKH/consensus estimates respectively, below expectations. A 74% yoy decline in China home sales as well as reduced launches in 2018 see our property earnings estimates having downside risk. Our earnings forecasts are under review. Maintain BUY with a lower target price of S$9.00.

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