Compiled by Kenneth Lim
OUE HOSPITALITY TRUST | BUY
TARGET PRICE: $0.82
AUG 2 CLOSE: $0.77
CIMB Research, Aug 2
H1 FY17 distribution per unit of 2.51 cents (+24 per cent year on year) was above consensus and our expectation at 51 per cent of our full-year forecast (Q2 FY17 was at 25 per cent).
We expect a stronger H2.
The beat sprang from stronger Mandarin Orchard Singapore (MOS) and faster consumption of income support.
Crowne Plaza Changi Airport (CPCA), however, dimmed results as we now expect it to achieve only the minimum base rent of $22.5 million for FY17 forecast versus its annual target rent of $29 million to $30 million. Nonetheless, we expect MOS to power ahead and partially offset the shortfall in CPCA. Maintain "add".
TIANJIN ZHONGXIN PHARMACEUTICAL GROUP CORP | BUY
TARGET PRICE: US$1.66
AUG 2 CLOSE: S$1.055
UOB Kay Hian, Aug 2
A renowned traditional Chinese medicine (TCM) pharmaceutical giant, Tianjin Zhongxin presents a unique opportunity with a deep discount between its A- and S-shares.
The latest reforms could unlock great value with a possible delisting, while its strong brand equity and research and development efforts (851 patents) make it a winner.
We expect average selling price hikes to lead to a 14.9 per cent net profit compounded annual growth rate in 2016-19 with 2018 net cash of US$0.17/share and 4.3 per cent yield.
Initiate coverage with "buy" and US$1.66 target price, based on peers' average FY18 forecast price-earnings ratio of 15.5 times.
CWT | ACCEPT THE OFFER
OFFER PRICE: $2.33
AUG 2 CLOSE: $2.13
OCBC Investment Research, Aug 2
While H2 FY17 core profit after tax and minority interests formed 57.8 per cent of our FY17 forecast, we expect CWT's logistics segment to weaken further on aforementioned reasons.
Consequently, our sum of the parts-derived fair value decreases from $1.95 to $1.91.
Our rating of "accept the offer", when the formal voluntary general offer is made by HNA (currently pending HNA shareholders' approval), remains unchanged.
However, we recommend investors to stay cautious amid China's regulator's probe on HNA overseas loans, which we believe creates uncertainty over the success of its takeover bid for CWT. With no visibility over the outcome, it makes sense for shareholders to reduce their risk by selling part of their holdings in the market.
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