Compiled by Cai Haoxiang
THAI BEVERAGE | ACCUMULATE (INITIATION)
JULY 10 CLOSE: $0.915
TARGET PRICE: $1.05
Phillip Securities Research, July 10
ThaiBev's premiumisation efforts have paid off.
We believe that the momentum will continue to make Chang beer the leading beer in Thailand by 2020.
There is demand recovery for alcoholic beverages as the impact from the mourning period will ebb in Q1 FY18; and with improving consumer sentiment and a broader economic recovery in Thailand.
Margins can expand due to economies of scale, better operating leverage on production facility sharing, and synergies among companies within the group.
VENTURE CORP | BUY
JULY 10 CLOSE: $12
TARGET PRICE: $13
OCBC Investment Research, July 7
Having reached this year's high of $13.07 on May 11, Venture Corp's share price has since corrected 9.7 per cent to $11.80 last Friday. This is in line with the pullbacks seen in the United States for technology stocks.
That said, having recorded a strong start this year, Venture Corp's long-term positive outlook remains intact.
We expect margin improvement to persist as its strategy of value creation for customers continues to bear fruit, coupled with continual efforts to increase productivity.
The fundamentals remain strong with a diversified revenue and customer base, and a net cash position since 2008, allowing it to maintain its annual dividends of at least $0.50 a share. Looking ahead, we expect revenue growth to persist steadily.
Also, market watcher World Semiconductor Trade Statistics projected annual global market growth of 11.5 per cent this year and 2.7 per cent next year.
STARHUB | SELL
JULY 10 CLOSE: $2.71
TARGET PRICE: $2.14
Citi Research, July 7
StarHub announced that it will acquire the remaining 49 per cent of Accel Systems & Technologies. That should help StarHub expand its cyber security capabilities or offers with Accel operating as both solutions provider and cyber security consultant.
While we do see the move as sensible, we remain concerned about the potential impact on competition with the pending commercial launch of TPG by next year.
Yield does look interesting at 5.9 per cent although we qualify that gearing levels are already at uncomfortable levels post-spectrum payments relative to regional peers.
This tempers our confidence in StarHub's dividends in the medium term, especially if the company moves to acquire assets for long-term growth as these could take time to gestate.
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