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CGS CIMB |
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STRATEGY – SINGAPORE Alpha Picks: Bracing For Higher Volatility Ahead
Our picks did reasonably well in August and we took the opportunity to take profit on Wilmar and Sunningdale, and remove DBS after our downgrade. We add Wheelock Properties for an attractive risk-reward trade, and Valuetronics for yield. WHAT’S NEW • Majority of picks outperformed in August. Our alpha picks did reasonably well in August, with most of our picks (except DBS and CDLH-T) outperforming the FSSTI’s 3.2% mom decline. The notable outperformers include Wilmar and Sunningdale, with the former rising 3.4% mom after posting stellar 2Q18 results in its strongest quarter since 2011. The better-than-expected results were due to strong margins in the tropical oils and oilseeds & grains division.
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ST Engineering Longer-lasting engine upcycle
■ Two points to highlight from the latest US$350m engine contract that STE’s aerospace division won: 1) MRO customers are sticky, 2) engine upcycle lasts longer. ■ The latest Jet Airways contract is an add-on engine maintenance from US$350m (secured in 2015) to US$700m, now covering the entire 80 B737NGs through 2024. ■ With this, aerospace has secured c.S$1.5bn contracts YTD and could match the FY17 record of S$2.8bn, in our view. We expect the group to secure c.S$5bn in 2018. ■ Maintain Add on STE with TP of S$3.80, based on blended valuations.
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| PHILLIP SECURITIES | OCBC |
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800 Super Holdings Ltd Oversold! SINGAPORE | INDUSTRIALS | FY18 RESULTS
FY18 revenue was within expectation Negative surprise of a 4Q18 loss dragged FY18 PATMI 25% lower than our estimate One quarter of loss during ramp-up is not representative of normalised business Overdone sell-down presents an opportunity to purchase mispriced stock Upgrade to BUY from Accumulate; new target price of $1.03 (previously $1.30)
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Viva Industrial Trust: Proposed merger resolutions approved by unitholders
All resolutions pertaining to the proposed merger were approved by ESR-REIT Unitholders and VIT Stapled Securityholders. Following the approval, the VIT Managers will be submitting their application to the Court for the sanction of the Scheme by the Court. We continue to monitor the progress of the proposed merger. Should it be approved by authorities, our estimate implies that 1 VIT unit can be traded for an aggregate value of at least S$0.934 (including the 9.6 S cents in cash). Recall that our rating for VIT unitholders was Accept the offer. |
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DBS VICKERS |
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Frasers Logistics & Industrial Trust (FLT SP) : BUY Asset recycling at play
• Proposed acquisition of two properties in Australia for A$62.6m • Young target portfolio with long WALE of 5.7 years offers income visibility • Proceeds from recent divestment in Australia to be redeployed into higher and sustainable yields
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Check out our compilation of Target Prices
