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Telecommunications – Singapore iPhone XS, XS Max And XR – Not A Game Changer
iPhone XS and XS Max represent incremental upgrades and look similar to the previous iPhone X. iPhone XS Max, with the largest display ever for iPhones, would appeal to fans of larger smartphones. Otherwise, iPhone XR, which is cheaper than iPhone XS by S$420-730, offers the best value for money. We do not expect telcos to suffer from hefty handset subsidies in 4Q18 due to the launch of iPhone XS, XS Max and XR. BUY M1 (Target: S$1.88) and StarHub (Target: S$1.92). Maintain OVERWEIGHT.
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Silverlake Axis Ltd Key highlights from DCTx2018 conference
■ We gathered some brief insights from the annual DCT conference hosted by SILV for over 200 delegates representing banks, mostly from Asia. ■ The event serves to reinforce the need to go digital in the banking sector and offers a preview of some of SILV’s new products to existing customers. ■ Management sounded upbeat on winning new core banking contracts ahead. Maintain Add with an unchanged TP of S$0.56.
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| OCBC SECURITIES | PHILLIP SECURITIES |
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Frasers Commercial Trust: Next leg up?
Since we upgraded Frasers Commercial Trust (FCOT) in April 2018, the counter has delivered a total return of 5.0% despite a challenging market, outpacing that of CCT (-2.0%) and the FSTREI (+1.0%). We think that there could be another leg left. As of 26 Sep 2018, the yield spread of FCOT against CCT stands at 494 bps. Looking back to the start of the last rental recovery cycle in 1H 2013, the yield spread compressed to ~366 bps, which is ~2 S.D. below the current 7-year mean. Separately, apart from the possibility of accretive UK acquisitions, we think concerns about the implications of a hard Brexit on future acquisitions could be overblown. We believe that defensive attributes can be seen in Frasers Property Limited’s (FPL; FCOT’s sponsor) portfolio of UK business parks, a possible hunting ground at some point for FCOT. In a Sep 2017 release, the four business parks then acquired by FPL counted Telecom, Business support services and Engineering as the top three tenant trades, which we believe are relatively less affected by a hard Brexit. Another defensive attribute of FPL’s portfolio is the relatively lower rental rates, vs. that of other office CBD and London locations. We maintain our BUY rating and fair value of S$1.53 for now.
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Land Transport Sector Positives all round SINGAPORE | TRANSPORT SERVICES | UPDATE
Maintain Overweight on the Land Transport sector due to positive industry restructuring and the worst being over for the Taxi industry 624 TDVLs issued in August 2018 exceeds the June 2013 historical high of 592 Average daily Rail ridership for SBS Transit has exceeded 1.2mn, up 24% YoY Maintain Accumulate on ComfortDelGro; unchanged target price of $2.78
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RHB SECURITIES |
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Ho Bee Land Ripe For a REIT?
We recently met with Ho Bee’s management and came away positive on its diversification efforts and overseas expansion plans. Ho Bee has been particularly active in acquiring London commercial properties due to the attractive yield spreads, long leases and freehold tenure. With sizeable investment assets of >SGD4bn, accounting for ~85% of 1H18 revenue, a potential spinoff of some of its assets into a REIT should unlock value and act as a major catalyst for the stock, in our view. It is trading at a 48% discount to its book value and offers a dividend yield of 4%.
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Check out our compilation of Target Prices
