Compiled by Andrea Soh
KEPPEL DC REIT | BUY
TARGET PRICE: $1.44
SEPT 13 CLOSE: $1.29
DBS Group Research, Sept 13
Keppel DC Reit will acquire Dataplex - its second co-location data centre in Dublin, Ireland - at an agreed value of €66 million (S$101.3 million).
The acquired asset, which started operations in 2013, has 25,200 sq ft of net lettable area and is located at unit B10 of the Ballycoolin Business and Technology Park, about 12km from the city centre.
We estimate the net property income yield of the new asset to be 7.5 per cent and contributions to be immediately accretive to distribution per unit (DPU).
FY18F DPU is projected to be lifted by 5.5 per cent to 7.72 Singapore cents, representing a yield of 5.9 per cent based on the current price.
The acquisition will be 100% funded by debt. We believe future acquisitions are likely to tap equity fund raising, which implies potential DPU dilution.
SATS | BUY
TARGET PRICE: $5.40
SEPT 13 CLOSE: $4.88
UOB Kay Hian, Sept 13
Risk/reward for SATS is tilted towards the upside over the next two quarters.
We expect SATS to secure in-flight catering and ramp handling contracts from Qantas and very likely from Norwegian Air too.
We expect 2QFY17 earnings to rise quarter-on-quarter from the inclusion of Jetstar Asia's catering contract and the ground handling contract for AirAsia.
Together with dividends, we expect SATS to generate a total return of 16 per cent over the next 12 months.
KEPPEL CORPORATION | BUY
TARGET PRICE: $7.36
SEPT 13 CLOSE: $6.29
OCBC Research, Sept 13
Keppel Offshore & Marine recently entered into a heads of agreement with Pavilion Energy and Indonesia-owned PT Perusahaan Listrik Negara to explore opportunities in the development of small-scale liquefied natural gas (LNG) distribution in West Indonesia.
Indonesia's small-scale LNG market is a new growth segment that offers interesting opportunities amid lacklustre demand in the traditional LNG market, but time and investments will also be needed for the roll-out of infrastructure and other developments.
As such, while we are optimistic of Keppel's good position to capitalise on any upcoming opportunities, we are not banking on immediate significant orders that can replace the void from jack-up rig orders.
On the other hand, Keppel's property and investments divisions should be expected to support earnings, driven by China's ongoing upcycle and Singapore's impending property market recovery.
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