ANALYSTS SAY: Buy, Sell, Hold (23 Aug 2019)

DBS 

Singapore Airlines (SIA SP)
Weak Cargo Traffic Could Be Offset By Strong Underlying Pax Demand

SIA’s July pax traffic growth and load factors are still robust, indicating strong underlying pax demand. We remain hopeful that the incremental pax revenue and profits could offset the decline in cargo profitability. SIA, meanwhile, is trading at a 4- year low P/B multiple of 0.7x but dividend yield is not compelling. Maintain HOLD. Target price: S$9.50. Suggested entry price: S$8.70.

Read more...

Manulife US Real Estate Inv
Poised to join the big boys

Poised to move higher. We maintain our BUY call on Manulife US Real Estate Investment Trust (MUST) with a revised TP of US$1.10. With tax concerns largely allayed in our view, we believe that investors will look towards MUST’s consistent delivery of a 4.5% CAGR in FY19-21F DPU to drive higher valuations for the stock. Supported by conducive cost of capital, we see MUST soaring to greater heights. BUY with a TP of S$1.10.

Read more...

OCBC 

Soilbuild REIT:
Proposed preferential offering of S$101.8m Soilbuild Business

Space REIT's (SBREIT) announced a non-renounceable preferential offering of 192,135,040 new units at an issue price of S$0.530 on the basis of 18 new units for 100 existing units. The offer price represents an 8.6% discount to 21 Aug’s close price. SBREIT plans to raise gross proceeds of approximately S$101.8m to fund the proposed acquisition of a property in Adelaide, Australia. Investors on SBREIT’s books as of 29 August are eligible for the offering which opens from 3rd to 11th September. The acquisition is expected to be DPU dilutive, with pro-forma FY18/1HFY19 DPU to fall 3.3% and 2.4% respectively, assuming 74% equity and 26% debt mix for the preferential offering of S$101.8m. Post-acquisition gearing is expected to fall from 39.4% to 38.3%. Management sees the proposed acquisition as an opportunity to deepen SBREIT’s presence in the attractive Australia office market and to increase diversification of SBREIT’s portfolio. Prior to this development, we had a HOLD rating and fair value estimate of S$0.60.

Sheng Siong (SSG SP)
From Manual To Auto, Sector Top Pick; BUY

 Reiterate BUY with a SGD1.32 TP, 12% upside and 3.1% yield. Sheng Siong is Singapore’s third-largest supermarket chain operator. While the industry is facing rising cost pressures from labour expenses, as at 2Q19, the group has actively rolled out hybrid check-out counters at its 57 stores to reduce manpower reliance. In view of a slowing economy and declining retail sales, we like Sheng Siong for its resilient earnings and steady FCF generation.

Read More ...