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MAYBANK KIM ENG |
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Sembcorp Marine Preparing the ground
■ We were right to expect a loss of S$20m-40m for 2Q18 as SMM posted loss of S$55.6m. This included S$27m of one-off loss for the completion of West Rigel sale. ■ 1H18 reported loss of S$50m was more than the S$42m we expected for FY18F. ■ EBIT losses narrowed sequentially to S$29m in 2Q18 from S$45m in 4Q17. ■ Key takeaway from briefing: Shell Vito project’s margin could be as good as repair/conversion (c.15%) as equipment are supplied by the owners. ■ Management also appeared to be confident of order pipeline although competition remains stiff. Maintain Add and TP of S$2.52. Order win is key catalyst.
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The last potentially great gaming market opens up
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| UOB KAYHIAN | OCBC SECURITIES |
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SIA Engineering (SIE SP) 1QFY19: Strong Associate Earnings Mask Deteriorating Top-line; Downgrade To HOLD
1QFY19 net profit is in line with expectations, underpinned by strong income from JV and associates which rose by a whopping 53.6% yoy, offsetting losses at the operating level. Revenue has declined yoy for two consecutive quarters as the repair and overhaul business appears to be more challenging than envisaged. We reduce our FY19 net profit forecast by 6.7% to S$178m. Downgrade to HOLD with a lower target price of S$3.40. Suggested entry level: S$3.00-3.10.
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CapitaLand Mall Trust: This is home truly, where I know I must be.
CapitaLand Mall Trust’s (CMT) 2Q18 results met our expectations. DPU rose 2.2% YoY to 2.78 S cents even though it retained a higher amount of its taxable income available for distribution to unitholders. Portfolio operating metrics was mixed, but aggregate leverage ratio stood at a healthy 31.5%. We believe the acquisition of the remaining 70% stake not owned by CMT in Westgate is a possibility over the near-term horizon. We retain our forecasts but lower our terminal growth rate assumption to 1.5% from 2% in light of the ongoing macroeconomic uncertainties. Our revised fair value estimate is S$2.10 (previously: S$2.26). Based on a closing price of S$2.16 on 20 Jul, CMT has delivered total returns of 4.2% YTD and 12.3% over a 12M horizon, outperforming the FTSE ST REIT Index’s -2.2% and 5.9% total returns, respectively. We believe investors can consider locking in some profits at current price level. Downgrade to HOLD. |
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RHB |
DBS VICKERS |
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CapitaLand Recent Cooling Measures – Minimal Impact
Maintain BUY with new SGD3.95 TP from SGD4.25, 24% upside. Among big-cap developers, CapitaLand has the least exposure to Singapore’s residential segment and is likely to see minimal impact from latest cooling measures. We expect sales from China projects to remain steady in 2H18. It also has CNY15.1bn in unbilled revenue from residential projects, which should boost earnings. It should benefit from continued build-up in recurring income base – eight malls opened last year – and higher fee income.
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Keppel Corporation
Dividend Surprise Reiterate BUY; TP adjusted slightly to S$9.00, reflecting price weakness in listed entities. 1H18 results were boosted by property en bloc sales and Nassim Woods revaluation gain. On top of 10 Scts interim dividend (vs 8 Scts in1H17), Keppel declared a special dividend of 5 Scts, which lifts our full year DPS projection to 27 Scts, translating to c.3.9% yield (prev. 3.2%). There could be another special dividend for FY18 as well. We continue to favour Keppel as a safer proxy to ride the O&M recovery, given its multi-pronged businesses.
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