ANALYSTS SAY: Buy, Sell, Hold (19 July '19)

KGI SINGAPORE

Hospitality REITs – Singapore Singapore Becoming More Hospitable

Hospitality REITs will benefit from a series of government initiatives to develop new tourism attractions, including those at Sentosa, Pulau Brani and the GSW, and limited supply of hotel rooms in the next three years. With visitor arrivals expanding at a 10-year CAGR of 6.2%, consistently surpassing population growth of 1.5%, the importance of the tourism sector can only increase over time. BUY FEHT, CDREIT and ART. Maintain OVERWEIGHT

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KGI Singapore High Dividend Watchlist (Ex-REITs)

 SPH now offers the second highest dividend yield in our Blue Chips category after its share price declined 8% on the back of disappointing 3Q FY2019 earnings. However, even with SPH’s higher-than-average yield of 5.4%, we think there are better opportunities such as Venture Corp.

 We add Venture Corp to our Blue Chips category given its 4.8% FY2019F dividend yield and decent valuations.

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UOB KAYHIAN

Keppel Corp (KEP SP)

1H19: In-line, Outlook Improving

KEP reported 1H19 net profit of S$356m, declining 39% yoy due to the high-base effect of 1H18 which saw significant contributions from en-bloc sales of its property projects. The highlights came from the infrastructure and property business segments with both facing robust revenue and business outlooks. An interim dividend of S$0.08 (1H18: S$0.10) was declared. We have a BUY rating with a target price of S$7.61.

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SATS (SATS SP)

1QFY20: Hit By Triple Whammy Of Weak Air Cargo, Jet Airways Exposure And Grounding Of B737 Max Aircraft.

SATS’ 1QFY20 earnings were below expectations and stand in contrast to the street’s expectation of a 6.8% yoy rise for the full year. We had warned that air cargo is likely to lead to lower 1QFY20 earnings, but we had underestimated the impact from Jet Airways and high opex. We expect SATS to face cyclical headwinds over the next few quarters and this should lead to lower earnings and PE multiples. Downgrade to SELL. Target: S$4.80.

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