Towards Financial Freedom
DBS Equity Research: Wired Daily 19 Apr 2016
Keppel Corp - 1Q16 results below on weaker O&M. Maintain HOLD for dividend yield and oil recovery; TP S$5.25
SIA - Beneficiary of low oil price with potential for higher dividend
Keppel Corporation's 1Q16 results below on weaker Offshore & Marine (O&M). Net profit fell 41% y-o-y to S$211m in 1Q16, hit by O&M segment. This was partially offset by stronger property earnings. We trimmed FY16F earnings by 8% factoring in further deferments. Rigbuilding outlook remains challenging. Maintain HOLD for dividend yield and oil recovery; TP S$5.25.
With jet fuel prices averaging less than US$50 per barrel, which is the current level, and crude oil prices not expected to rebound and sustain above US$55 per barrel in the next six to 12 months, we have lowered our jet fuel price assumption for Singapore Airlines for FY17F and FY18F to US$65 and US$70 per barrel respectively. We are raising our FY16F and FY17F forecasts by 15% and 10% respectively, which is roughly in line with consensus forecasts. We continue to like SIA as a beneficiary of the current low oil price environment. Furthermore, SIA has the potential to pay more dividends as earnings recover and also given that it has over S$3bn net cash on its balance sheet. Maintain BUY, TP: S$13.30 (Prev S$11.50).
HPH Trust 1Q core profit was weak as expected, declining 26% y-o-y to HK$210m as revenues declined 7% y-o-y to HK$2,752m on 8% overall decline in throughput handled. However, HPHT did receive a government rent and rates refund of HK$430m after reaching agreement to the final rateable value of certain leased properties for the past years. Total profit rose 94% y-o-y to HK$555m as a result of this refund. While the management did maintain its full year DPU guidance of HK 30cts - 32cts, there was some surprise when HPHT announced that it will look to repay a minimum of HK$1bn of debt annually beginning from 2017 to lower its gearing level and improve its interest coverage ratios in a rising interest rate environment. This would likely impact FY17 DPU by 15%-20%. Given the weak start to the year, and more importantly likely pressure on DPU between 2017- 2021 from the debt repayment program, we place our TP of US$0.61 and BUY recommendation under review.
1Q16 DPU for CapitaLand Mall Trust was slightly behind our estimate. Debt headroom remains decent for asset enhancement initiatives (AEI) and potential acquisitions. We maintain our FY16F DPU, however, due to the lack of material information on the redevelopment plan of Funan, we have not accounted for capex or Funan's possible additional future earnings. In addition, the stock price has performed well over last quarter and our forecasted total return has now been compressed to 6.9%. Hence given limited upside, we downgrade our recommendation to HOLD with TP of S$2.20.
China Everbright Water (CEW) won the tender of a public private partnership (PPP) project for the construction of the "sponge city" of Zhenjiang, Jiangsu. The Zhenjiang Sponge City Project is one of the 16 "sponge city" pilot
projects jointly announced by the Ministry of Finance, the Ministry of Housing and Urban-Rural Development and the Ministry of Water Resources of the PRC. The total investment amount is estimated to be Rmb2.585bn, which comprised of Rmb1.2bn subsidy from the central government and Rmb1.385bn investment from project company. The project will be carried out by a 70:30 JV between CEW and Zhenjiang Waterworks Corporation which is an indirect subsidiary of the State-owned Assets Supervision and Administration Commission of the Zhenjiang People's Government. We believe this is a major step forward for CEW in diversifying its revenue stream and stepping into the provision of more comprehensive environmental services. It has also demonstrated CEW's ability to secure large projects from the government by leveraging its strong engineering and operational ability and good reputation in the water sector. CEW's total project wins YTD amounted to Rmb2.7bn.
Darco Water Technologies was awarded a RMB40.9m contract from Tianjin SDIC Jinneng Electric Power. This Project is for the construction of a desulfurization zero-liquid discharge wastewater treatment system for Tianjin Power's power generating plant in North China, representing one of the first desulfurization zero liquid discharge wastewater treatment projects in China. The Project is expected to be completed and delivered by 31 December 2016.
Cacola Furniture proposed to issue up to 902.7m new shares as repayment of the total debt of S$4.06m. The issue price of S$0.0045 represents a discount of 10% to the last volume weighted average.
March's residential sales was a robust 843 units (1,328 units including executive condominiums), mainly came from the strong debut of Sim Lian's Wandervale (EC) which cleared 292 units, Capitaland's Cairnhill Nine (177 units sold) and Northern Resi's Wisteria (125 units sold). YTD sales in CCR region almost tripled while OCR grew 45% boosted by the three projects. RCR recorded -32% y-o-y to 334 units. We expect demand for new launches (eg. The Strudee Residences, Jem at Toa Payoh) to remain strong. Our picks: CapitaLand, City Developments and Frasers Centrepoint Ltd.
U.S. stocks rose as oil price pared losses amid falling output in Kuwait due to a strike. According to Bloomberg, while the failure of large oil producers to agree to a freeze in output initially sent crude lower, losses were limited amid the strike and on speculation China's slowdown is easing at the same time central banks remain ready to bolster growth. New York Fed President William Dudley added to confidence in the US economy with comments that suggest inflation will firm, and corporate earnings have so far largely topped estimates. The Euro rebounded amid speculation that the ECB will maintain its monetary policy when it meets this week.
Source: DBS
Related Stocks
| Chart | Stock Name | Last | Change | Volume |
|---|
Market Buzz
More articles on Towards Financial Freedom
Duty Free International Ltd. - A duty-free giant in the making
Created by kiasutrader | Oct 17, 2016
Cityneon Holdings - 'Avengers' showcasing in the Land Down Under
Created by kiasutrader | Jun 07, 2016
Discussions
Be the first to like this. Showing 0 of 0 comments
Post a Comment
Featured Posts
Latest Videos
Apps
Top Articles
1
SGX Market Updates
US Magnificent Seven Stock DLCs Introduced for Asian Market Hours
2
RHB Investment Research Reports
3
SGX Market Updates
4
5
CEO Morning Brief
Keppel DC REIT Buys Data Centres in Singapore’s Genting Lane for S$1b
#
Stock
Score
Daily Stocks
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
Featured Advertisers / Partners
Ride The Bull Short The Bear
CS Tan
4.9 / 5.0
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
