Compiled by Anita Gabriel
DBS GROUP HOLDINGS | NEUTRAL
TARGET PRICE: $23.33
NOV 20 CLOSE: $23.86
RHB Research, Nov 20
We are excited about DBS' digital implementation. Besides working to pre-empt disruptors in Singapore and Hong Kong, DBS launched new digital distribution models in India and Indonesia.
These two growth markets are likely to record 20 per cent compounded annual growth rate in income in the future.
DBS is working on cloud architecture which makes it inexpensive to scale the platform software; hardware is also inexpensive as there are many suppliers.
We cut our forecast of DBS operating expenses, and consequently raised both 2018 and 2019 net profit forecasts by 2 per cent.
We are also more optimistic on the long-term return on equity for DBS and raised it to 11.1 per cent (from 10.6 per cent).
This contributed to our higher target price of $23.33 (from $21.45). However, we maintain "neutral" as the positives have largely been priced in.
KEPPEL DC REIT | BUY
FAIR VALUE: $1.50
NOV 20 CLOSE: $1.39
OCBC Research, Nov 20
Keppel DC Reit is poised to benefit from the sanguine outlook for the data centre industry in 2018 given its significant exposure to the Asia-Pacific region.
Also, Singapore is a key data centre hub in the region. Supply pressures are easing and we expect demand to remain robust.
Factoring in the recent Dublin data centre acquisition and adjusting our cost of equity assumption downwards from 8.1 per cent to 7.8 per cent, we raise our distribution per unit forecast for FY18 by 2.6 per cent and bump up our fair value estimate from $1.39 to $1.50.
NOV 20 CLOSE: $0.66
DBS Group Research, Nov 20
Oxley Holdings continues to landbank, snapping up the collective sale of the 124-unit Mayfair Gardens for $311 million.
This translates to a land price of $1,244 per square foot per plot ratio (psf ppr). The estimated breakeven price of the new project is around $1,750 psf. Based on the maximum plot ratio of 1.4 times, the new development could potentially house close to 387 units (based on an average unit size of 70 square metres).
While the breakeven price appears high, implying that launch prices could be closer to the $1,900-$2,000 psf range, we note that transacted prices in the vicinity have ranged between $1.4m and $2.3m for larger unit sizes, meaning that appetite to purchase homes in the vicinity remains strong.
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