DBS Equity Research: Wired Daily 28 Apr 2016

kiasutrader

Publish date: Thu, 28 Apr 2016, 04:19 PM

STI - Minor rebound after FED leaves rates unchanged, but capped at 2930 amid weak results season

Sembcorp Marine - Brace for more turbulence ahead; trimmed FY16-17F earnings by 10-14%.

U.S. stocks rose as the comments reassured investors that it will proceed gradually in raising interest rates amid slow but steady growth in the economy. In its statement, the FOMC today omitted previous language that "global economic and financial developments continue to pose risks," and said officials will "closely monitor" such developments. The USD pulled back and oil price rebounded. Singapore stocks should get a minor lift in the current session following the decline over the past 1 week and with stocks going exdividend in the current period. However, we think the bounce is likely soft, capped at the 2930 level amid the weak 1Q results season.

Sembcorp Marine's (SMM) headline net profit tumbled 48% y-o-y to S$54.8m. While this makes up 21%/24% of ours and consensus' full year estimates, bottomline was supported by gains of S$9.5m arising largely from the increase in its stake in Gravifloat AS. Core earnings were rather weak. Revenue plunged 30% y-o-y to S$918m while EBIT margin contracted 2.8ppts to 7.8%. While SMM had made provisions of S$609m for 75% of the outstanding rig orders in FY15, additional provisions could be required if the operating environment deteriorates further, especially in Brazil, which accounts for 33% of SMM's orderbook. We trimmed FY16-17F earnings by 10-14% after pushing back the resumption of the Sete projects by 3 months to 1Q17 and lowering margins by 0.4-0.5ppt. Maintain FULLY VALUED and S$1.24 TP.

UOB Group this morning reported net earnings of S$766m for 1Q16, down 4.4% y-o-y, in line. The lower earnings trend was largely due to softer non-interest income as wealth management and loan-related fees were lower coupled with lower trading income. Total income rose 0.7% to S$1.97 bn, mainly supported by higher net interest income. Net interest income rose 6.1% to S$1.28 bn, driven by improved net interest margin - which saw a 2 basis-point increase to 1.78%. Non-performing loan (NPL) ratio remained stable at 1.4%. Loan growth was sluggish at 1% q-o-q/3% y-o-y, led by building and construction and housing loans. More updates to follow.

Ascendas India Trust (a-itrust ) reported a solid quarter with a 8% growth in DPU for 4Q16. We expect a-itrust to continue to deliver solid growth in FY17. Robust DPU CAGR of c.10% in FY17-18F driven by acquisitions and planned development projects. Upside to acquisition capacity based on gearing of 45% vs 40% previously. We maintain our BUY call on aiTrust, with revised TP of S$1.02 (Prev S$1.03).

1Q16 earnings for Sheng Siong Group in line with expectations, supported by wage credits. Growth is expected to be driven by new stores. Sheng Siong plans to add another four stores in 2Q16. We raise FY17F earnings by 5% to account for higher government grants going forward. Maintain BUY, with higher TP of S$1.04 (Prev S$1.01).

Mapletree Commercial Trust's FY15/16 DPU up 1.6% y-o-y, in line. VivoCity led the performance with over 12% rental reversion and close to full occupancy. PSA Building saw improvements in committed occupancy and Merrill Lynch Harbour Front has renewed its master lease. Maintain BUY, TP revised to S$1.58. The stock offers FY17-18F yield of 5.8%.

Source: DBS

Sembcorp Marine (S51)UOB (U11)CapLand India T (CY6U)Sheng Siong (OV8)Mapletree PanAsia Com Tr (N2IU)

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