Singapore Market Monitor ~ Key Stock Recommendations - Maybank Kim Eng 2017-06-08: Growth Ahoy? (!)

Singapore Market Monitor - Maybank Kim Eng 2017-06-08: Growth Ahoy? (!) Key Stock Recommendations Singapore Stock Market Key Stock Recommendations 2H2017 UOL GROUP LIMITED U14.SI HO BEE LAND LIMITED H13.SI ASCENDAS REAL ESTATE INV TRUST A17U.SI MAPLETREE INDUSTRIAL TRUST ME8U.SI HEALTH MANAGEMENT INTL LTD 588.SI SINGAPORE MEDICAL GROUP LTD 5OT.SI

Singapore Market Monitor - Key Stock Recommendations




... Continue From >> Singapore Market Monitor ~ Strategy & Outlook - Maybank Kim Eng 2017-06-08: Growth Ahoy?(!)


Our key stock recommendations 

  • We detail below six top picks from the property sector and healthcare sector with BUY ratings.
  • We also highlight four stocks from other different sectors that we like but have limited upside from a valuation/target price standpoint at this moment.


UOL (UOL SP, BUY, TP SGD9.05) 

  • Key reason: Biggest Singapore exposure amongst large-cap developers and best proxy to a rebound in residential prices.
  • Valuation: RNAV with cap rate assumptions of 3.50-3.75% and 4.75-5.00% for its office and retail investment properties respectively.
  • Key risk: Overpaying in land bank replenishment.


HOBEE (HOBEE SP, BUY, TP SGD3.00) 

  • Key reason: Like it for: Indirect beneficiary of improving sentiments in the prime office market, given its 40% office portfolio exposure.
  • Valuation: RNAV with 4.00% cap rate assumption on its office property, and SGD1,650psf for its unsold Sentosa residential portfolio.
  • Key risk: Sharp fall in value of office properties in the UK (19% of RNAV).


AREIT (AREIT SP, BUY, TP SGD2.85) 

  • Key reason: (1) Well-entrenched business parks exposure, and momentum from Australian diversification strategy, (2) Debt headroom to support further inorganic/redevelopment growth opportunities.
  • Valuation: DDM-based with key assumptions of 2.5% risk-free rate, 6.5% market risk premium and 0.7x beta.
  • Key risk: Termination of long term leases contributing to weaker portfolio retention rate.


MINT (MINT SP, BUY, TP SGD2.05) 

  • Key reason: (1) Visible growth drivers from on-going redevelopment initiatives to support 3.6% DPU CAGR from FY17-20E, (2) Debt headroom to support further inorganic/redevelopment growth opportunities.
  • Valuation: DDM-based with key assumptions of 2.5% risk-free rate, 6.5% market risk premium and 0.73x beta.
  • Key risk: Termination of long term leases contributing to weaker portfolio retention rate.Stock picks based on bottom up factors and screening.


Health management Int’l (HMI SP, BUY, TP SGD0.84) 

  • Key point: Unique operating model which offers independent practice for doctors; good track record.
  • Valuation: DCF-based TP of SGD0.84 (WACC 7.4%, LTG 2.0%) implies 35x FY18E P/E, on par with the peer group average.
  • Key risk (s): Execution of Malaysia expansion.


Singapore Medical Group (SMG SP, BUY, TP SGD0.78) 

  • Key point: Multi-disciplinary platform with track record in turning around loss-making businesses – has just completed a major acquisition 
  • Valuation: TP of SGD0.78 is based on 27x FY18E EPS (average 2-yr forward mean of small-cap healthcare peers in Singapore). We have not factored in any future M&A.
  • Key risk (s):  Competition, M&A integration and regulation in overseas markets.



Four others from non-property and healthcare space we like but with limited valuation upside at this point.

DBS (DBS SP, HOLD, TP SGD19.18) 

  • Key reason: Biggest beneficiary of expected rising interest rates and growth in wealth management business.
  • Valuation: Valued ~1.1x FY17E P/BV on assumed sustainable ROE of 10.8%, COE 10.5% and growth rate of 3.5%.
  • Key risk: NPA risks from O&G portfolio not over; provisions likely to stay elevated.


Venture Corporation (VMS SP, BUY, TP SGD13.35) 

  • Key reason: Bright earnings growth prospects coming from structural trends such as new low-cost technologies supplanting current ones in industries such as Life Sciences.
  • Valuation: We value Venture on 16x FY17E earnings, in line with a PEG of 1x, 3-year EPS CAGR of 16%, against its peer average of 16.5x.
  • Key Risk: M&A activities amongst its customer base could break out and result in temporarily reduced orders.


Jumbo Group (JUMBO SP, HOLD, TP SGD0.66) 

  • Key reason: Jumbo is seeking to replicate past success in Shanghai in new markets such as Vietnam and Beijing. It has a strong track record but we await more clarity.
  • Valuation: We value JUMBO using DCF with a WACC of 8.3% and longterm growth of 3%.
  • Key Risk: Overseas expansion into new territories via franchising/JV raises the risk premium for Jumbo.


Comfortdelgro (CD SP, HOLD, TP SGD2.64) 

  • Key reason: Big diversified footprint with over 45,000 vehicles in seven countries. It has a stable business and robust operating cash flows. Positive catalyst from the winning of tender from Thomson East Coast Line.
  • Valuation: Target price of SGD2.64 is based on 17x FY17E EPS, a slight premium to the historical average of 15x to reflect a positive change in the bus model.
  • Key risk: Further structural weaknesses in taxi (Uber, Grab), regulation and higher start-up costs from rail.




Singapore Research Maybank Kim Eng | http://www.maybank-ke.com.sg/ 2017-06-08
Maybank Kim Eng SGX Stock Analyst Report BUY Maintain BUY 9.050 Same 9.050
BUY Maintain BUY 3.000 Same 3.000
BUY Maintain BUY 2.850 Same 2.850
BUY Maintain BUY 2.050 Same 2.050
BUY Maintain BUY 0.840 Same 0.840



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