Business

Brokers' take

Compiled by Anita Gabriel

SINGAPORE MYANMAR INVESTCO | BUY

FAIR VALUE: $0.665
NOV 16 CLOSE: $0.455

OCBC Research, Nov 16

Singapore Myanmar Investco reported its 1HFY18 results on Tuesday; gross profit increased 52.5 per cent year-on-year (y-o-y) to US$3.1 million (S$4.2m), led by an increase in gross profit margin from 21.1 per cent in 1HFY17 to 26.6 per cent.

The group recorded a net loss of US$2.1m from continuing operations versus a net loss of US$1.6m a year ago.

Notably, Duty Free & Fashion Retail and Construction Services made up 59.4 per cent of 1HFY18 revenue, with profit (before unallocated expenses) increasing 60 per cent y-o-y to US$2.1m.

Looking ahead to 2HFY18, management expects to post a y-o-y increase in revenue, along with reduced operational costs.

Foreign arrivals at Yangon International Airport reached 0.75 million for the first eight months of 2017, up 14 per cent y-o-y.

One key risk to our FY19 forecasts is a continuation of the Rakhine crisis, which may deter visitors from signing on tour packages next year and put a damper on arrivals.

Nonetheless, the long-term growth story is still intact.

RHT HEALTH TRUST | HOLD

TARGET PRICE: $0.85
NOV 16 CLOSE: $0.855

DBS Group Research, Nov 16

RHT received a proposed takeover offer from Fortis Healthcare for 46.5 billion Indian rupees (S$966m) or 34.98m Indian rupees net of debt, which translates to $0.90 per share.

This is an 11 per cent premium to yesterday's closing price, and implies price-to-net asset value of 1.07 times.

The price is fair based on the implied valuation. In addition, we note that the 1H18 distribution has not been declared.

According to Fortis' announcement, the proposed transaction would be funded with a combination of equity, quasi-equity and/or debt.

Fortis has an enabling resolution in place to raise capital for up to 50b Indian rupees and has been in active dialogue with financial/strategic investors to raise funds.

SPACKMAN ENTERTAINMENT | BUY

TARGET PRICE: $0.20
NOV 16 CLOSE: $0.113

RHB Research, Nov 16

Spackman booked a $0.77m loss in Q3FY17, in line with our estimate, as there were and would be no movie launches after Master in 2017.

Nonetheless, it will launch two new movies in 2018, with a sturdy budget of around US$9m per feature.

Also, China lifting its ban on Korean entertainment in early November could be very beneficial for the company and its talent management agency associate.

We believe that Spackman's management may acquire more companies in an effort to reshape its business model and diversify its revenue stream, as well as secure more recurring revenue.

Its share price has fallen quite sharply and is now at an attractive level.

Disclaimer: All analyses, recommendations and other information herein are published for general information. Readers should not rely solely on the information published and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.