Today's Focus

• Trendlines Group - Initiate coverage with a BUY call and target price of S$0.28. 

We initiate coverage on Trendlines Group with a BUY call and target price of S$0.28. Trendlines (TTGL) is a leading technology incubator in Isreal. It is a seed-stage investor in medical and agriculture technology start-ups. Unlike traditional VCs, incubators provide start-ups with a higher level of support such as technology labs, staffing, physical space, and strategic guidance in addition to funding. TTGL is considered the best incubator in the Medtech space and is the only government franchised incubator in Agtech space. TTGL currently has a portfolio of 46 companies, of which 17 are in commercialisation stage. We conservatively forecast 15% CAGR in portfolio value over FY15-17F versus 18% average over FY11-14. Three companies within its portfolio are exploring M&A opportunities. Even if one of them materialises, TTGL may beat our forecasts. There has been a general de-rating of incubators in the current market turmoil due to the lumpy nature of the business and the lack of dividends. However, TTGL is trading at a whopping 55% discount to its peers, who are trading at 1.3x Price to Book (P/B). Based on 1.1x FY16F P/B our one year target price is S$0.28 implying 74% upside potential.

Keppel Fels, in a joint bid with McDermott of the US, is said to have made the shortlist for one of the largest floating production contracts on offer in the international bid circuit this year. The Business Times understands Hess has shortlisted the pair along with at least two other contenders - Samsung Heavy Industries in a partnership with Modec, as well as a lone bid from SBM Offshore - to progress to the next tender phase for the eventual engineering, procurement and construction (EPC) prize on a semisubmersible production unit (semisub) lined up under the Equus gas field development off western Australia.

Ley Choon Group has secured contracts worth approximately S$7.4m from Public Utilities Board (PUB) for the supply and installation of water connection works.

The SRX Property's flash estimate for its resale price index for non-landed private homes in January registered a 0.6% month-on-month increase. This translates to a year-on-year drop of 1.7%, as well as a fall of 7.2% from the recent peak in January 2014. The 0.6% gain in the index last month contrasted with a 0.5% month-on-month drop in December 2015. The December decline was a revision from the 0.8% drop SRX Property had indicated earlier based on its flash estimates for that month.

US stocks fell on continued concerns about health of global economy and that central banks are ineffective with few bullets left to support their ailing economies. Signals by central banks from Europe to Japan that additional stimulus is at the ready have failed to sooth nervous investors. Interest rates in Eurozone and Japan are already negative while the FED looks increasingly unlikely to raise rates at the March FOMC meeting. Meanwhile, oil price is currently on the rebound in Asian trade with WTI higher by around 4% to USD27.4pbl.

Source: DBS