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UOB KAYHIAN |
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China Aviation Oil (CAO SP) China Aviation Traffic Continues To Grow Stay BUY with SGD1.60 TP, 30% upside, 3.6% yield. We believe the decline in CAO’s share price during the last one month seems unwarranted. Market seems overly concerned about a slowdown in China’s aviation traffic, despite passenger traffic growing by 3.9% YoY in April. We remain positive on CAO’s long-term earnings growth prospects, aided by growth in China’s international passenger traffic as well as capacity expansion at Shanghai Pudong International Airport (SPA). In addition, its ex-cash 3.9x 2020F P/E remains compelling.
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ComfortDelGro Corporation (CD SP) Sustainable Prospects From Public Transport Initiatives
The LTMP 2040 was recently announced by the LTA, which included plans for the extension of SBS Transit’s Downtown Line and the commencement of a feasibility study for a new rail line in the north/northeast region. Enhancing public transport connectivity is a long-term positive for CD with a pipeline of initiatives to increase capacity. Maintain BUY with an unchanged PE-based target price of S$2.77.
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| OCBC | DBS VICKERS |
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Thai Beverage: In better spirits
Since our downgrade to Hold (on 13 till 27 May’sclose , Thai Beverage PLC (ThaiBev) has posted total returnsof 1.6 %, vs. the STI’s 2.9 %. Notably, the stock declined7.3% on the first day post ThaiBev’s 2Q19 results beforereclaiming lost ground. We believe the initial share pricesoftness is likely due to moderated expectations fordomestic spirit volume growth for the rest of the year, aswell as a response to the strength of the rally YTD at thattime. Is it worth collecting ThaiBev shares now ? Valuationslook reasonable but are not particularly compelling to us, asat 27 May’s close. According to Bloomberg consensus,ThaiBev is currently trading at a blended forward P/E of17.8x which is near its 5 year average of 18.2x. Whilevaluations are undemanding, we note that regionaleconomic growth remains an important variable for thecompany’s outlook given its discretionary consumer productportfolio. We continue to monitor the US China tradetensions and its ramifications for global growth closely.Separately, associate Fraser and Neave (F&N) announcedthat it has, through a partnership with Maxim’s CaterersLimited, entered into an agreement to acquire the entireissued share capital of Starbucks Coffee (Thailand). Afterupdating our cost of equity, our fair value dips from S$0.88to S$0.86. We maintain HOLD on Thai Bev.
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Hongkong Land (HKL SP) : BUY Takeaways from China Management Presentation and Site Visit in Chongqing
• Decent profit contributions from development projects which carry respectable margins • Contract sales to pick up in 2H19 from more new project launches • Property development in China should enhance earnings profile but may not necessarily re-rate the stock due to the inherent risk perceived by the market on this sector • Valuation is undemanding; Maintain BUY with US$8.02 TP
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Check out our compilation of Target Prices
