BEST WORLD INTERNATIONAL | BUY (INITIATE COVERAGE)
FEB 1 CLOSE: $1.84
TARGET PRICE: $2.36
DBS Group Research, Feb 1
Best World's flagship Dr's Secret range of premium skincare, which represents 70 per cent of the group's sales, has been immensely successful in Taiwan. Best World's largest market by revenue, its Taiwan operations still hold more potential.
Best World hopes to emulate its success in China, where the cosmetics sector is forecast to grow at 12.9 per cent CAGR into 2019. With much of the groundwork already laid in the PRC, MOFCOM's indirect endorsement through the recent award of its rare direct selling licence provides Best World with the credibility and platform needed to gain scale in the world's most populous nation and second-largest direct selling market.
We opine it should trade at 16x FY2017F earnings (at a smaller discount to global peers' 19x). Key risks include lack of control over individual distributors' selling process and the impact of unanticipated changes in local regulations and restrictions.
ST ENGINEERING | HOLD
FEB 1 CLOSE: $3.30
TARGET PRICE: $3.20
OCBC Investment Research, Feb 1
Singapore Technologies Engineering (STE) recently announced that its electronics arm, ST Electronics, is acquiring a 51 per cent equity stake in SP Telecommunications (SPTel) from Singapore Power for about $54 million, which will be finalised post-closing, subject to a $60 million maximum.
SPTel owns, builds and operates communication and infrastructure services in Singapore and also owns an extensive network of fibre optic back-haul infrastructure and facilities. This proposed acquisition will strengthen ST Electronics' capabilities in the Info-Communications Technology (ICT) segment. We believe this acquisition allows ST Electronics to be better poised to provide ICT solutions for enterprise customers and is also in-line with Singapore's smart nation vision.
ASCENDAS INDIA TRUST | BUY
FEB 1 CLOSE: $1.06
TARGET PRICE: $1.12
DBS Group Research, Feb 1
While Ascendas India Trust has rallied over 30 per cent since we upgraded the stock to "buy" 12 months ago, we believe a-iTrust's growth story has yet to gain recognition among investors at large. With Singapore-focused Reits increasingly facing headwinds translating into slowing DPU growth (average DPU CAGR of 1 per cent), investors would gravitate to a-iTrust given its healthy two-year DPU CAGR of 6 per cent and still decent 5.4-5.9 per cent yield.
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