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Singapore Press Holdings (SPH SP)

Seeing Improvement, But Still Not In The Clear


SPH’s media print ad revenue showed marginal signs of relief, although the risk of secular decline remains. While the non-media segment performed well, especially its retail property, uncertainties remain on the group’s ability to offset its media segment decline. The group is trading at a discount of 0.6x book value, but near-term catalysts are lacking. Maintain HOLD with SOTP-based target price of S$1.22. Entry: S$1.05.


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ST Engineering (STE SP)

Aerospace Division Secures Two Key Contracts, But Recovery Trajectory For 2021 Is Still Uncertain


We highlight three developments: a) a 5-year maintenance contract from an international cargo carrier, which we surmise is FedEx; b) STE has been appointed exclusive maintenance provider for Honeywell’s components on the LEAP Engines for 10 years; and c) the US imposes additional tariffs on Airbus’ components, which could impact STE’s nacelle production. While positive on the first two announcements, ongoing trade tensions and a delay in border openings could hinder 2021’s earnings recovery. Maintain HOLD. Target price: S$3.65. Suggested entry range: S$3.40-3.45.


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Next leg of growth lies overseas


Investment Thesis

Stabilisation of earnings and core revenues. With operations stabilising, we expect core revenues to continue their gradual recovery and for FY21 DPU to increase c.10% y-o-y. Resumption of AEIs to drive organic growth. As the COVID-19 pandemic stabilises, ESR-REIT (“EREIT”) has resumed AEI works and embarked on new projects to drive organic growth. AEI plans in FY21 are expected to generate a return of c.7% compared to EREIT’s estimated WACC of 5.5%


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Wilmar International


Deserves higher valuation multiples

Investment Thesis

Wilmar set to reap the benefits after a decade of investments to deliver steady profit performance. Wilmar’s strong earnings growth momentum from both its China and exChina operations should support Wilmar’s share price performance and close the valuation gap with its China subsidiary YKA. Beside its well-integrated platform, we think Wilmar should trade at higher multiples on better market liquidity than YKA.


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LionelLim8.16Check out our compilation of Target Prices

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