Q1 2017 REPORT CARD
UOB Kay Hian, May 17
After two years of earnings disappointments, we are seeing nascent signs of an earnings recovery, with market earnings per share raised after Q1 2017.
However, we are selective after the FSSTI's outperformance, and are buying laggards and inexpensive blue chips.
Our key picks are OCBC Bank, Venture Corporation, CapitaLand, Frasers Logistics & Industrial Trust, Ascendas Reit, Sembcorp Industries and CapitaLand Commercial Trust.
"Sells" include SIA Engineering and Singapore Press Holdings. Investors with an appetite for mid-caps and looking for alphas could consider China Aviation Oil, Keppel Telecommunications & Transportation and Citic Envirotech.
CNMC GOLDMINE HOLDINGS | BUY
TARGET PRICE: $0.44
MAY 17 CLOSE: $0.295
Phillip Securities Research, May 17
Revenue and net profit missed our expectations due to a sharp drop in sales volume of gold.
Based on unchanged 9.8 per cent cost of equity and discounted free cash flow to equity, we derive our updated target price of $0.44 (previous: $0.68). We maintain our "buy" rating.
GOLDEN ENERGY AND RESOURCES | BUY
TARGET PRICE: $0.78
MAY 17 CLOSE: $0.415
KGI Securities, May 17
We maintain our "buy" reccommendation with a target price of $0.78 based on our discounted cash flow (DCF) valuation.
Our fair value is at a significant discount to the valuation range for its Borneo Indobara mining concession.
Our DCF-derived fair value of US$1.9 billion is at a discount to the US$2.3 billion to US$3.5 billion valuation range for its BIB concession alone (not including the value of its three other mines and forestry business), as per the valuations indicated in the Independent Qualified Person's Report.
THE STRAITS TRADING CO | BUY
TARGET PRICE: $2.73
MAY 17 CLOSE: $2.33
OCBC Investment Research, May 17
The Straits Trading Co (STC) reported a Q1 2017 profit after tax and minority interest (Patmi) of $21.9 million, down marginally from $22.6 million in the same period last year.
Profits from the real estate segment increased to $19.2 million from $11.5 million in Q1 2016 mostly due to fair valuation gains from investment properties, partially offset by the absence of rental income from an office building in Australia divested in November 2016.
The group also recorded a net gain on divestment for an Australia hotel in 2016.
In terms of the topline, Q1 2017 revenues dipped 5 per cent to $133.5 million mainly due to weaker contributions from the tin mining segment.
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