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DBS Equirt Research: Wired Daily 1 Feb 2016

kiasutrader
Publish date: Tue, 02 Feb 2016, 12:26 PM


STI - 2500 inflexion taking shape, pullback support 2585, rebound potential 2750

OSIM - Valuations attractive with dividend yield at close to 7%. Upgrade to BUY

Our view for an inflexion point around 2500 continues to take shape. Whether or not this level is the 'ultimate bottom' remains to be seen. But we think odds have increased for a short-term U-turn leading to a counter-trend rally in the weeks/month ahead. We note that historically, the Singapore stock market tends to be underpinned during the March-April period leading to the ex-dividend date for many stocks over the April-May period. We lift immediate support for the STI to 2585 and peg a rebound potential to 2750 that coincides with the 65-day exponential moving average.

We turn positive on OSIM after a >40% share price decline since we downgraded the stock in October 2015. Valuations are attractive with dividend yield at close to 7% and forward PE (c.10x) at close to -1SD of its 7-year mean (14x). 4Q15 earnings showed sequential improvement with signs of bottoming out. We believe this will support DPS and dividend yield going forward. We hence do not see further downside pressure on the stock. Instead, earnings recovery momentum and valuation from a PE basis lead us to believe that OSIM's share price reflects value. Our target price of S$1.28 is based on 14x FY16F PE.

1Q16 DPU for Frasers Hospitality Trust up 7.5% to 1.72 Scts, which was above expectations. Results were boosted by better performance from Australia and Japan. We expect FHT to benefit from the refurbished InterContinental Singapore, which will come on stream from March onwards. Maintain BUY, TP of S$0.83. With 1Q16 results ahead of expectations, we see potential upside to our numbers if the strong performance from Australia and Japan is sustained for the remainder of the year. For now, we maintain our BUY call and TP at S$0.83. At current levels, FHT trades at a c.15% discount to its NAV per share of S$0.86 and offers a prospective 8% FY16F yield.

Mapletree Greater China Commercial Trust (MAGIC) reported 3Q16 DPU of 1.854 Sct (+11.6% y-o-y) in line. The Trust benefits from the recent acquisition of Sandhill Plaza, FX tailwinds and uplift in rents at its existing properties. Maintain BUY, TP of S$1.11. After the recent share price correction, MAGIC trades at 0.72x P/Bk (NAV per share of S$1.167) and offers a prospective 8.6% FY16F.

The consortium comprising JGC Corporation, Yongnam and Changi Airports International, has signed a framework agreement with Myanmar's Department of Civil Aviation (DCA) for the design, construction and management of Hanthawaddy International Airport (HIA). The consortium was earlier named by the DCA as the successful tenderer for the HIA project on 29 October 2014. HIA is estimated to be completed in 2022. Once operational, the HIA is expected to have an initial capacity of 12 million passengers per annum, making it the largest airport in Myanmar. Yongnam holds a 25% interest in the consortium.

Smartflex Holdings has entered into a non-binding term sheet with Novo Tellus PE Fund for the disposal of the entire issued share capital of Smartflex Technology (SFT) and Smartflex Innovation (SFI), for up to S$26.08m cash. Upon disposal, Smartflex will become a cash company.

ISOTeam is off to a good start in 2016 having secured seven new private and public sector contracts totalling an aggregate of $16.68m.

Developers' sentiment weakened further in Q4 2015, according to the results of the NUS-Redas Real Estate Sentiment Index (RESI) survey. The Current Sentiment Index fell to 3.6 from 3.7 in Q3 2015, while the Future Sentiment Index fell to 3.4 from 3.7 in Q3 2015. The three sectors with the lowest net balance scores in Q4 2015 were the office, suburban residential and prime retail sectors.

Source: DBS 
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