DBS Equity Research: Wired Daily 30 Nov 2015

kiasutrader

Publish date: Mon, 30 Nov 2015, 04:54 PM

IHH Healthcare - 3Q results impacted By translation losses. Maintain HOLD recommendation with revised TP of RM6.19/ S$2.04

We maintain our view for the STI to range from 2825 (11.46x FY16F PE, -1.5SD) to 3030 (c.12.22x FY16F PE, - 1SD) over the next 1 month. Attention this week is drawn to the release of November job numbers. Consensus expects non-farm payrolls of 200k with the unemployment rate staying at 5%. A positive interpretation of the payrolls figure could well seal the deal for a FED hike rate in December. If so, December's rate hike will be the first since 2004. Our economist expects a payrolls figure of 160k (below consensus) and thinks that although the figure won't be high, it will be high enough to keep the Fed on track for lift-off on 17Dec.

While 3Q15 headline for IHH Healthcare showed a drop of 19% y-o-y to RM118.5m, this was due to FX translation loss of RM217m arising from non-Turkish Lira borrowings by its Turkey operations. Excluding this, core profits would have been RM222.7m, registering a growth of 26% which will be within our expectations. Revenue grew by 16% to RM2.064bn. While inpatient admissions numbers were fairly lackluster (partly due to seasonality and economy), revenue growth was helped by higher revenue intensities and more complex cases being handled. We trim our earnings forecasts by 11% to factor in the FX translation, but retain our operating forecasts for FY15F and FY16F. We maintain our HOLD recommendation for IHH with a revised TP of RM6.19/ S$2.04. While we like its geographical diversification and premium healthcare services provider status, we believe current valuation at c.48x FY16F PE reflects this.

Olam International announced that its Grains platform plans to expand into animal feed and related businesses in Nigeria. The expansion involves investments in setting up poultry and fish feed mills as well as hatcheries to produce day-old-chicks.

SPH Reit is looking to acquiring retail assets both locally and overseas in a bid to expand its portfolio from the current two shopping malls. In Singapore, the Reit is closely watching assets in terms of yield-accretion, location and sustainability.

OKP Holdings has been awarded a S$94.6m contract by the Land Transport Authority (LTA) for the construction of a viaduct from the Tampines Expressway ("TPE") to the Pan Island Expressway (Westbound) and Upper Changi Road East. The contract commenced on 23 November 2015, and is expected to be completed by the first quarter of 2020. This brings total contracts secured in 2015 to S$291.3m.

Alliance Mineral Assets has signed its first individual contract to supply Tantalite concentrate under the terms of the distribution agreement signed with Mitsubishi Corporation RtM Japan Ltd. Although this first initial sample order Tantalum concentrate is not expected to have a material financial impact to the financial results of the Company for FY2016, it earmarks a significant milestone, and the Company expects that further orders will follow.

ISOTeam has secured 14 new private and public sector contracts in Singapore totalling an aggregate of $20.5m. Its recently expanded Others segment, which comprises four complementary businesses including painting projects and coating and repainting work, also continues to gain traction and break new ground for the Group with projects secured from new sectors and new clients.

Fitch Ratings said in its latest Asia-Pacific Structured Finance Chart that Singapore's private residential property prices have fallen 8.2% from their peak in September 2013. The fall has been driven mainly by tighter policy controls aimed at cooling the housing market. Fitch believes that if immigration rates remain low while vacancy rates and property supply remain elevated, property prices will continue to soften.

Source: DBS

IHH (Q0F)Olam Intl (O32)SPHREIT (SK6U)OKP (5CF)ISOTeam (5WF)

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