MAPLETREE INDUSTRIAL TRUST | BUY
JUNE 20 CLOSE: $1.815
TARGET PRICE: $1.93
OCBC Investment Research, June 20
Mapletree Industrial Trust's (MIT) share price has softened 3.5 per cent since its YTD peak on June 2, versus the FTSE ST Reit Index's 0.6 per cent gain.
We believe this pullback presents buying opportunities as we expect MIT to register a 4.9 per cent growth in DPU in FY18.
MIT also announced its proposed divestment of its 65 Tech Park Crescent property for $17.7 million to Concrete Innovators Co Pte Ltd, slightly above its latest valuation of $17.6 million but significantly above purchase price of $13.2 million.
We are positive on this transaction as the 10-year master lease with Metech International Ltd will be expiring in November, and there would likely be efficiency loss and downtime if the property was converted to a multi-tenanted building.
RAFFLES MEDICAL GROUP | SELL
JUNE 20 CLOSE: $1.345
TARGET PRICE: $1.25
CIMB, June 19
Our implied core Ebitda margins of 19.3 per cent, 19.6 per cent, and 19.6 per cent for FY17, FY18 and FY19 forecast (FY16: 19.7 per cent) respectively could be too optimistic.
Q1 17 already came in below at 18.3 per cent. FY16's slide in core Ebitda margin to 19.7 per cent (FY13: 23 per cent) was only due to gestation costs from small expansion projects.
With large projects coming onstream over the next 12 months, we strongly believe margin pressure will further intensify over FY17-18F. We think consensus is struggling to estimate the cost impact from the group's Singapore hospital extension and the upcoming 700-bed Chongqing hospital, partly because this is the first time it is expanding/building a new hospital since its flagship Raffles Hospital and there is little to benchmark against.
However, if we use IHH's newly opened 500-bed Gleneagles HK hospital to get a sense of the magnitude of costs to expect for the group, our FY18F Ebitda could fall by 50 per cent.
SHENG SIONG GROUP | BUY
JUNE 20 CLOSE: $0.975
TARGET PRICE: $1.20
DBS Equity Research, June 20
We remain positive on Sheng Siong on the back of better visibility for higher margins.
We believe expansion of its distribution centre will grow and sustain gross margins going forward.
Margins remain on the uptrend supported by the increase in direct sourcing, bulk handling and fresh mix contributing to earnings growth.
Stock is trading attractively at 20.3x FY18F PE compared to historical average of 23x since listing. Yield remains attractive at 4.4 per cent.
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