Compiled by Andrea Soh
UOL GROUP | BUY (UPGRADE)
JUNE 27 CLOSE: $7.69
TARGET PRICE: $8.39
OCBC Investment Research, June 27
UOL announced an option agreement with Haw Par Corporation Ltd (Haw Par) under which UOL will have a call option and Haw Par a put option for UOL to allot and issue approximately 27.3 million new shares of UOL in exchange for 60 million UIC shares that Haw Par owns.
Upon completion, UOL's interest in UIC will increase from 44.71 per cent to 48.94 per cent and we understand that the SIC has waived UOL's obligation to make a mandatory general offer as long as it does not cross the 49 per cent threshold.
We believe UOL's move makes strategic sense. This swop will enable UOL to acquire a significant UIC minority interest which is otherwise not available given the lack of trading liquidity.
More importantly, from our analysis, the transaction will be accretive for UOL, which will deepen its effective ownership stake in desirable UIC assets, such as Singapore Land Tower and Marina Square.
We update our valuation model for the swop, firmer residential average selling prices and also reduce our RNAV discount from 25 per cent to 20 per cent.
JADASON ENTERPRISES | BUY
JUNE 27 CLOSE: $0.089
TARGET PRICE: $0.15
RHB Research, June 27
With Jadason's turnaround in Q117, we look forward to a stronger Q217 and a period of explosive growth in H217.
As at Q217, utilisation is already at 60-plus per cent (same as Q416) vs 40-plus per cent in Q117.
We understand that plans to ramp up for its new mobile product from the US are on track and the new project would commence in July 2017, with full utilisation expected by end-Q317.
Jadason's CEO Fung Chi Wai last bought back shares in May this year, which we view as a vote of confidence on its outlook. Before the share buyback, Mr Fung bought back shares twice in January 2017.
With projected bumper profits ahead, coupled with positive key macro data on the electronics sector, we maintain our "buy" call, with an unchanged DCF-derived TP of $0.15 (67 per cent upside).
CAPITALAND COMMERCIAL TRUST | BUY
JUNE 27 CLOSE: $1.64
TARGET PRICE: $1.90
UOB KayHian, June 23
CCT has completed the divestment of a 50 per cent stake in One George Street for $591.6 million ($2,650psf) to insurer FWD Group.
Management is still evaluating whether distribution from One George Street sales proceeds will be partly used to mitigate the income shortfall.
We reduce our 2017-19F DPU by 1-3.1 per cent after factoring in the loss of income from One George Street. Maintain "Buy" with a lower target price of $1.90 (previously $1.94).
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