Compiled by Claire Huang, The Business Times
SEMBCORP INDUSTRIES | NEUTRAL
TARGET PRICE: S$3.60
NOV 3 CLOSE: S$3.30
Credit Suisse, Nov 3
Utilities' net profit of S$28 million in Q3 '17 was impacted by S$56 million of impairments in Singapore related to an ageing boiler and goodwill for a cogen plant.
This was offset by S$14 million writeback of provision related to Jurong Aromatic Corporation.
Excluding these one-offs, Q3 '17 profit of S$70 million was below expectations, driven by losses in India.
There were no updates on the strategic review, which chief executive Neil McGregor said was in the final stages and would be announced shortly. No financial targets will be provided in the strategic review.
We expect the announcement to be made in late-November. We expect utilities' returns to remain low in the near term.
CHINA AVIATION OIL | NEUTRAL
TARGET PRICE: S$1.80
NOV 3 CLOSE: S$1.67
RHB, Nov 3
CAO reported lower-than-expected 9M '17 results (69 per cent of our 2017 estimate), with Q3 '17 gross and net profit declining for the first time in 10 quarters.
Lower gains from trading activity and higher costs were the key reasons for its weak performance.
While jet fuel trading volume continues to grow (+7 per cent year-on-year), we downgrade CAO to 'neutral' (from 'buy') amid increased uncertainty in the trading business and poor visibility on the merger and acquisition timeline. We lower our target price to S$1.80 from S$1.90.
STARHUB | REDUCE
TARGET PRICE: S$2.50
NOV 3 CLOSE: S$2.72
Nomura, Nov 2
Fixed enterprise was the only segment that grew in Q3 '17 for StarHub, which has been the case for the last three quarters.
This was driven mostly by consolidation of the cybersecurity business, Accel Systems & Technologies Pte Ltd.
However, revenue was still flat, adjusted Ebitda up 3 per cent and earnings down 11 per cent from higher depreciation and amortisation. We maintain our 'reduce' rating and S$2.50 target price.
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