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UOB Kayhian |
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REIT Retail REIT: Improving but challenging
■ 9MCY18’s occupancy rate was >97% while rental reversions were positive. ■ However, in line with expectations, tenant sales and shopper traffic remained anaemic, moving in the range of -3% to +3% yoy. ■ Maintain Overweight on REITs. Retail is now our 3rd preferred subsector, above industrial as it will be more insulated against the impact of trade war.
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Wilmar International (WIL SP) Superb 3Q18 Performance; Back To Norm In 4Q18
We raise our 2018 net profit forecast by 11% after factoring in the strong 3Q18 performance. Based on the revised earnings, net profit is likely to come in lower yoy in 4Q18 (4Q17: core net profit of US$373.9m) due mainly to a lower sugar contribution and no investment gains. Tropical oil is expected to do well in 4Q18 as refiners are having better bargaining power in a palm oil oversupply situation. Maintain BUY. Target price: S$3.90.
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| OCBC | DBS VICKERS |
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Singapore Airlines: Tata SIA Airlines to merge with Jet Airways?
According to The Economic Times, the Tata Group and Naresh Goyal-promoted Jet Airways are inching towards a two-step transaction, the first leg of which could see the merger of Jet Airways with Tata SIA Airlines (JV between Tata and SIA that operates Vistara). The second step could involve the purchase of the Goyal family’s stake in the combined entity by SIA. According to sources, Jet Airways may first merge with Tata SIA through a share swap. If successful, the transaction will give Tata SIA Airlines (51% owned by Tata, 49% by SIA) landing rights, routes and related infrastructure amenities of Jet. Cash strapped Jet has been in talks with investors to sell assets to stay afloat – it has made a profit in only FY16 and FY17 since FY08 (year end in Mar). Meanwhile, the market is likely to focus on the structure of the deal (should there be one), as well as the plans of Tata SIA Airlines to turn the combined entity into a profit-making one. We maintain our BUY and FV estimate of S$10.71 on SIA given its low valuations. |
Keppel Infrastructure Trust (KIT SP) : BUY Delivers on acquisition promise
• Announces agreement to acquire Ixom, a leading producer and distributor of chemicals in Australia • EV of A$1.1bn implies 8.2x FY18 EV/EBITDA, a fair valuation compared to peers • No immediate DPU accretion from the deal, but promise of steady longer term growth in cash flows
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Check out our compilation of Target Prices
