Towards Financial Freedom

DBS Equity Research: Wired Daily 23 Mar 2016

kiasutrader
Publish date: Wed, 23 Mar 2016, 10:22 AM


Super Group - Downgrade to HOLD because earnings growth is priced in

StarHub to acquire 9.05% stake in mm2 Asia

We downgrade SUPER to HOLD from BUY after our upgrade post 4Q15 results. Our TP of S$0.97 based on 20x FY17F earnings largely prices in earnings growth prospects for now. We have seen the stock surge by c.40% post our upgrade and at these levels, we believe upside is capped. Valuations are now at near average of its 4-year mean at 22.7x FY16F PE. Asian branded F&B peers are trading at 21x FY17F PE, in line with SUPER's current FY17 valuations. We roll over our TP to 20x FY17F earnings, which give rise to our TP of S$0.97.

StarHub has acquired a 9.05% stake in the Catalist-listed content producer mm2 Asia for S$18mil or $0.41/share via a share placement exercise. Through this deal, StarHub intends to expand its pay TV offerings through original content creation to differentiate itself. StarHub may also choose to tap on mm2's cineplex business to showcase its content in China and Malaysia as well as gain access to top rated concerts and artistes through UnUsUaL, of which mm2 owns a stake. For mm2 Asia, the placement price represents a discount of approximately 19.2% to the last volume weighted average price. The estimated net proceeds of S$17.98m will be used for general working capital purposes. We currently have a BUY call on mm2, with target price of S$0.525 (after adjustment for stock split). Our recommendation and target price are under review.

Singtel's wholly-owned subsidiary, Singtel Innov8 Pte Ltd, has invested S$0.71mil in Singapore-based engineering company HOPE Technik. Following the investment, Singtel Innov8's shareholding in HOPE Technik will increase from 18.7 to 21.3 per cent. HOPE Technik provides complete engineering solutions for commercial and government customers.

Most U.S. stocks fell moderately as investors turned to safe haven assets such as gold and the USD following the deadly terrorist attacks in Brussels. Gold rebounded following a 4-day dip and while the 10-year German bunds yield fell. US treasuries fell as Federal Reserve Bank of Chicago chief Charles Evans called U.S. economic fundamentals "really quite good."

Source: DBS 
Related Stocks
Market Buzz
Discussions
Be the first to like this. Showing 0 of 0 comments

Post a Comment