Singapore Alpha Picks - CIMB Research 2017-05-30: Analysts' Alpha Picks For 2017 (Large Cap)

Singapore Alpha Picks For 2017 - CIMB Research 2017-05-30: Analysts' Alpha Picks For 2017 (Large Cap) Singapore Stock Picks 2017 Large Caps Stock Analyst Recommendations FRASERS CENTREPOINT LIMITED TQ5.SI CHINA AVIATION OIL(S) CORP LTD G92.SI FIRST RESOURCES LIMITED EB5.SI GENTING SINGAPORE PLC G13.SI THAI BEVERAGE PUBLIC CO LTD Y92.SI UOL GROUP LIMITED U14.SI

Singapore Alpha Picks - CIMB Analysts' Alpha Picks For 2017 (Large Cap)

  • Big-caps Stock Picks: China Aviation Oil CAO, First Resources, FCL, Genting Singapore, UOL and Thai Beverage (new). 
  • We remove ST Engineering STE (outperformance YTD). 
  • Look to buy on weakness as smart-nation and ICT spending will be medium-term drivers. 



China Aviation Oil (TP S$2.28)

  • CAO trades at CY18F P/E of 10x vs. global peers’ c.16.4x and our target of 13x CY18F P/E. It is net cash (S$0.26/share) and has a committed dividend payout of 30% p.a., which implies CY18F yield of 3.0%.
  • Main exposure to two of the largest global aviation markets (China and US) underpins growth of jet fuel supply/trading and associate contributions (mainly SPIA). It is also a beneficiary of global trade opportunities with China’s “outward” policies (i.e.
  • ‘One Belt, One Road’) via major shareholder CNAF.
  • Quality sustained CY17 net profit performance and dividend in 4Q are catalysts. The stock was admitted to the MSCI Singapore Small-Cap Index in May 17.


First Resources Ltd (TP S$2.32)

  • First Resources trades at P/Es of 14x for FY17 and 11x for FY18, below the regional plantation sector average P/E of 18x for FY17. Our target price of S$2.32 is based on an FY18 P/E of 13x, the stock’s average historical P/E.
  • First Resources is our top pick among the Singapore planters due to its superior operating efficiency compared to peers, strong FFB output growth prospects and attractive P/E valuations vs. peers.
  • A potential re-rating catalyst is stronger-than-expected earnings. Key risks are lower CPO prices and production.


Frasers Centrepoint Ltd (TP S$2.05)

  • FCL is one of the cheapest listed Singapore property developer stocks, trading at a 36% discount to RNAV with a high dividend yield of 4.6%.
  • It has a robust recurrent income profile, making up more than 75% of PBIT, and a strong growth profile as the group continues to deploy capital, such as the recent acquisition of Geneba Properties.
  • An additional catalyst for share price outperformance could materialise should the group’s free float be increased and trading liquidity improves.


Genting Singapore (TP S$1.24)

  • GENS trades at CY18F EV/EBITDA of 9.1x vs. its historical 6-year average of 11.3x and our target of 12x. It is still net cash (FY17F S$2.4bn) ex-perp redemption and committed to FY17F DPS of 3 Scts.
  • Forward adjusted EBITDA is now optimised following tight credit policies (lower forward trade receivable provisions). Its forward EPS will be relieved by S$118m p.a. post perp redemptions by 4Q17. RWS is being rebranded as a premier lifestyle-based integrated resort and redevelopment of RWS could lead to stabilised market share.
  • Dividends in 3Q/4Q and sustained CY17 EBITDA recovery are near-term catalysts. Positive updates on Japan Casino Bill are mid-long-term catalysts.
  • Licence bidding could occur from mid-18 onwards.


Thai Beverage (TP S$1.07)

  • Thaibev’s investment thesis is about the company transforming into a truly regional beverage play, with catalysts to come from the potential corporate restructuring of F&N/FCL and inorganic opportunities in Vietnam.
  • Closer to home, Thaibev has done well to maintain its dominant market position (#1 in spirits, #2 in beer) in Thailand, even as consumption post the mourning period remains muted. Any market share gains for Chang will re-rate the stock, in our view.
  • Trading at 20x forward P/E, Thaibev is still below peers and we see room for positive re-rating upon corporate activity.


UOL Group (TP S$7.96)

  • UOL is trading at an attractive 30% discount to RNAV. The group is well levered to the Singapore property market recovery, with c.40% of its NAV exposed to this market.
  • UOL acquired two residential sites in late-2016 and this boosted its potential launch inventory to 915 units. This will enable the group to leverage on any uptick in residential prices.
  • Catalysts could come from its ability to increase its stake in associate UIC without being subject to the ‘creep up’ rule.




LIM Siew Khee CIMB Research | Singapore Research Team CIMB Research | http://research.itradecimb.com/ 2017-05-30
CIMB Research SGX Stock Analyst Report ADD Maintain ADD 2.050 Same 2.050
ADD Maintain ADD 2.320 Same 2.320
ADD Maintain ADD 2.28 Same 2.280
ADD Maintain ADD 1.240 Same 1.240
ADD Maintain ADD 1.070 Same 1.070
ADD Maintain ADD 7.960 Same 7.960



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