| CIMB |
OCBC |
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Singapore Airlines First SIA mainline yield increase in three years
■ SIA’s FY3/18 core net profit of S$582m was 10% above our expectations due to better-than-expected yields at SIA mainline and Scoot. ■ SIA declared a 30 Scts final dividend (2.7% yield), ahead of last year’s 11 Scts, with the shares trading ex-dividend on 31 Jul, to be paid on 15 Aug. ■ We maintain Add but reduce our target price from S$12.05 (1x CY18F P/BV) to S$11.75 (1.05x P/BV) due to the negative earnings impact from higher oil prices. ■ Share price catalysts include the impending final dividend and the continuation of positive yield momentum at SIA mainline during FY19F.
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Viva Industrial Trust: Vis-à-vis la Viva
VivaViva Industrial Trust (VIT) has reached an agreement concerning the proposed merger with ESR-REIT. In effect, each VIT unit is to receive S$0.096 in cash and 1.6 new ESR-REIT units. We deem the terms are “principal-positive” for VIT unitholders. We estimate that this fair value of the merged entity should lie at ~S$0.53 per unit and above, assuming that there are positive synergies to be gained from the merger. Overall, our estimate implies that 1 VIT unit can be traded for an aggregate value of at least S$0.942 (including the S$0.096 in cash). For the merger to go through, approvals need to be sought from both ESR-REIT’s and VIT’s unitholders. Given the favourable terms, we encourage VIT unitholders to accept the offer. |
| UOB | UOB |
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Tianjin Zhongxin Pharmaceutical Group Corporation (TIAN SP) Discount To A-Share Too High To Ignore
The spread between TJZX's China A-shares and SGX S-shares continues to widen and we believe the current 60.8% discount (wider than its five-year average) is too high to ignore. Management sees 2018 as the start of “multiple times of growth in three years” and we believe this is realistic in view of: a) the favourable industry outlook, b) ongoing price hike of its key drug, and c) fresh initiatives by the new management team. Maintain BUY with PE-based target price of US$1.72 unchanged.
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Singapore Airlines (SIA SP) Analyst Briefing Takeaways: A More Optimistic Management; Earnings Could Hit S$1b In FY19
We are now more positive on SIA than anytime over the past three years. We believe the increase in fuel prices could ironically alleviate some of SIA’s competitive pressure from the Chinese carriers. We also believe that SIA’s long-term fuel hedges are working in its favour. The carrier is now focusing on improving its yield and ancillary revenue. We now expect net profit to hit the S$1b mark in FY19. Maintain BUY and raise target price to S$12.60.
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| RHB | DBS |
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Retail - Staples Shopaholic Hits The Grocery Stores
Reiterate OVERWEIGHT, as we remain optimistic on the outlook for the year on improved consumer sentiment in Singapore. Sheng Siong is our Top Pick. Also, based on our recent grocery shopping trips, we note the tight competition amongst supermarket operators have led to much improvements in product range, store-front displays and self-checkout counters – thereby greatly improving the overall grocery shopping experience.
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Yanlord Land Group Potential restructuring to accelerate Maintain BUY on attractive valuation and ongoing corporate restructuring.
The company has recruited senior personnel from large listed developers Vanke and Longfor for project and human resources management, and introduced professionals from Fosun for capital management. They will form a core team to review the company’s strategy, form business plans, set up new corporate structures, incentive schemes and conduct financial market positioning. We expect corporate restructuring and corporate actions to improve asset turn and result in stock re-rating. Currently trading at a distressed valuation of 4.5x FY18E PE and 3.9x FY19E PE, the counter has room for re-rating. We maintain BUY with a slightly adjusted TP of S$2.27, pegged to 6x FY18E PE.
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Check out our compilation of Target Prices
