ANALYSTS SAY: Buy, Sell, Hold (28 June '19)

UOB KAYHIAN 

Keppel Corporation

Tailwinds

■ We think Keppel is gradually enjoying the first fruits of seeds planted in recent years and is on track to see steady earnings recovery from FY19F.

■ With YTD orders at S$1.8bn, or 72% of our S$2.5bn order target for 2019, we see further upside and upgrade our orders to S$3bn for FY19F.

■ 2Q19F preview: we expect core profit of S$125m (1Q19: S$203m) in the absence of gains in property and M1 acquisition. Maintain Add, TP S$8.41.

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Quantitative Analysis

Performance Tracker And Tactical Recommendation

Since our tactical recommendation on 6 Jun 19 to switch into banks and Venture Corp in response to Trump’s tariff threat, the FSSTI has rallied by 5.8%. Banks and Venture Corp were outperformers as we anticipated, while O&M stocks, CapitaLand and CityDev also had extended gains. From a technical perspective, Bumitama and Ho Bee appear the most attractive. Our tactical recommendation suggests a switch out from the top 6 outperformers to Bumitama, Ho Bee, CD REIT and FHT.

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DBS VICKERS

Koufu Group Ltd

Time to whet your appetite

Upgrade to BUY, TP raised to S$0.85.

We turn positive on Koufu and upgrade our recommendation to BUY with a TP of S$0.85, as we expect the group to post higher net earnings growth of 8.8% in FY19F. Post our downgrade, the stock has declined by close to 12%. Earnings growth will be driven by the turnaround of its foodcourt and kiosk businesses. We raise our FY19-20F earnings forecasts by 7% each as we impute 1) positive contribution of the Supertea and R&B kiosk business; 2) better foodcourt sales efficiency; and 3) lower depreciation. Valuation is now more palatable at 13.1x FY20F PE with visible growth drivers.

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Singapore Exchange 

Pursuing growth and scale

• SGX realigns business and client organisation; no additional costs associated with reorganisation

• New units to include: Fixed Income, Currencies and Commodities, Equities, Data, Connectivity and Indices and Global Sales and Origination

• Continuously build on its strengths within units to pursue growth and scale; no tangible growth targets as yet

• Likely to see acquisitions and new partnerships coming through

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