Compiled by Angela Tan
SINGAPORE EXCHANGE | BUYJAN 22 CLOSE: $8.35
TARGET PRICE: $8.90
DBS Group Research, Jan 22
We reiterate our positive view on Singapore Exchange (SGX), given improved sentiment on the market and higher volumes for both equities and derivatives businesses.
We expect its earnings to grow by 4 per cent to 11 per cent going forward, after a weak FY17. SGX's continued efforts to drive market liquidity and new product initiatives should bear fruit in the coming years.
We are more positive on the Singapore market activity for both securities and derivatives.
Our earnings forecasts are more bullish than consensus by 3 per cent to 6 per cent across the FY18-20 forecast on stronger revenue assumptions driven by improved market activity in light of better market sentiment.
New derivative product launches, potential structural changes to boost liquidity in the securities market, and earnings accretive mergers and acquisitions are potential catalysts for the stock.
COMFORTDELGRO | BUYJAN 22 CLOSE: $2.10
TARGET PRICE: $2.40
Maybank Kim Eng, Jan 19
UberFLASH, the collaboration between Comfort and Uber, could see Comfort's taxi drivers receive more booking jobs due to the inclusion into Uber's ride-booking platform with its extensive base of users.
In addition, Uber's technology-centric ride-booking platform should increase efficiency and reduce idle times.
More importantly, improved earnings for taxi drivers will reduce the declining demand to rent and drive Comfort taxis.
After the inclusion into Uber's ride-booking platform, Comfort taxis could level the playing field with other private-hire vehicles.
UberFLASH will enable dynamic pricing for Comfort taxis, which will revise the fares upward or downward based on demand and supply. Without dynamic pricing, we note that the pricing under UberFLASH is comparable to Grab and Comfort taxis.
Catalysts for the stock include: completion of acquisition of Uber-owned Lion City Rental by Comfort, which is expected to be an earnings accretive deal; and losses narrowing for the rail segment as revenue from the Downtown Line 3 has started.
SEMBCORP MARINE | BUY
JAN 22 CLOSE: $2.39
FAIR VALUE: $2.37
OCBC Investment Research, Jan 22
Sembcorp Marine's (SMM) share price spiked 9.4 per cent last Tuesday and another 9.5 per cent last Friday. There can be several reasons: 1) potential privatisation or divestment by Sembcorp Industries; no fine or small fine with regard to Brazil as opposed to Keppel Corp; or a big order is coming up.
Judging from the recent price action, the possibility of scenario 1 seems quite likely.
Should an offer for SMM materialise, there could still be some upside supposing the price offered is higher, which is typically the case to entice shareholders to bite. Assuming a 20 per cent premium from current levels, this would translate to about $2.76 a share.
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