| UOB KAYHIAN |
OCBC |
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STRATEGY – SINGAPORE 2Q18 Results Wrap-up – More Beats But Outlook Moderated
29% of the 2Q18 results exceeded our forecasts, compared to only 15% in 1Q18. However, our market EPS growth forecast has been trimmed to reflect weaker guidance and outlook, particularly from banks and telcos. Remain selective on the FSSTI, which is trading at a slight 4% discount to mean valuations.
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Starhill Global REIT: Time to rekindle this star We believe the worst is likely over for Starhill Global REIT (SGREIT). Its committed Singapore office occupancy has moved from a low of 83.5% in 1QFY18 to 95.0%, as at 30 Jun 2018. For retail, challenges will likely remain, but this will be partially buffered by the long-term master lease with Toshin at Ngee Ann City Retail. Meanwhile, in Australia, its Plaza Arcade mall will see new anchor tenant UNIQLO opening its doors in 3QCY18. We fine-tune our assumptions and raise our FY19 and FY20 DPU forecasts by 1.0% and 0.3%, respectively. Our revised projections translate into DPU growth of 4.0% for FY19. SGREIT’s share price has fallen 12.9% YTD, making it one of the worst performing S-REITs. With expectations of DPU recovering in FY19 and valuations still not reflective on this, given that SGREIT is trading at FY19 distribution yield of 7.0% and P/B of 0.74x, we believe it is an opportune time for investors to revisit this stock. Upgrade to BUY with a higher fair value of S$0.74.
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| CGS CIMB | CGS CIMB |
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Singapore Strategy Buckle up
■ There is no hiding place in this fragile environment. We think the theme for the Singapore market defines itself by elimination, i.e. who is cheap and less bad. ■ We find ourselves leaning towards more large-cap picks with (a) valuation/dividend support, and (b) quality profit growth/ROE re-rating. ■ Our current picks are: AREIT, CDLHT, Comfort Delgro, Genting Singapore, Keppel Corp, MAGIC, Sheng Siong, Sembcorp Industries, ST Engineering and UOB. ■ Relatively safer small caps are: CSE Global, HMI, mm2 and Riverstone. ■ FSSTI is not expensive at -1 s.d. of mean at 12.3x CY19 P/E (+4% yoy EPS growth). Our FSSTI target is 3,380 (13x CY19F P/E), 0.5 s.d. of mean, pricing in uncertainty.
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Jadason Enterprises Limited Challenging 2H
■ Jadason posted a 2Q18 net loss of S$0.4m, below our expectations. ■ Although the gross profit margin improved to 22.4%, the 7% revenue decline led to lower profitability. ■ Excluding an exchange loss of S$0.6m, adjusted net profit was S$0.1m. ■ The company has guided for a challenging 2H given trade tensions between the US and China, which affect Jadason’s end customers. ■ We value Jadason at an unchanged 1.0x CY18 P/BV but lower our target price to 7.3 Scts due to earnings cuts.
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PHILLIP SECURITIES |
PHILLIP SECURITIES |
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Y Ventures Group Ltd Expecting a stronger 2H18 SINGAPORE | E-COMMERCE| 1H18 RESULTS
Revenue and net profit in 1H18 weaker than expected. Gross margin improved from 41% to 45% and expected to remain firm. Maiden revenue contribution from Faire Leather at US$0.5m. Maintain BUY with a lower target price of S$0.61 from S$0.70. We lowered of FY18e earnings by 18%.
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Q & M Dental Group Organic growth picking up SINGAPORE | HEALTHCARE | 2Q18 RESULTS
1H18 Revenue/PATMI met 39.3%/49.7% of our full year expectations; 2Q18 effective tax rate was lower than our assumption. Opened 3 new clinics in 1H18. Another 4 more clinics for Singapore and 3 for Malaysia in 2H18. Adoption of dividend policy of paying out at least 30% of core operating earnings. Interim dividend was lower at 0.4 cents per share (-43% YoY). Upgraded to BUY and TP of S$0.65 (previously S$0.63), based on estimated 2.3 SCents FY18 EPS and 28x FY18e PER. No change to our earnings estimates.
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