Business

Brokers' take

Compiled by Kenneth Lim, The Business Times

Compiled by Kenneth Lim, The Business Times

CHIP ENG SENG CORP

| ACCUMULATE

TARGET PRICE: S$0.81

FEB 21 CLOSE: S$0.715
PHILLIP SECURITIES RESEARCH, FEB 21

CES pre-launched a 720-unit condominium development project, Grandeur Park Residences, on Feb 18.

The development is in the Tanah Merah district, on New Upper Changi Road, approximately 200mfrom the Tanah Merah MRT Station.

We are expecting the take up rate for the development to be strong as a majority of these units are smaller in sizes, translating to a lower purchase price which will aid homebuyers to secure financing in the face of the 60 per cent total debt servicing ratio cooling measure.

We expect average selling price at the development to fall in the region of $1,350.

As the site does not require the prefabricated prefinished volumetric construction system and is able to generate cost savings by taking the construction works in-house, we are optimistic that the group is able to lock in a development margin in the high teens.

We project the development will potentially add about $135 million in development profits and add about 18 Singapore cents (after taxes) in our projected revalued net asset value (RNAV) when completely sold.

We have not included potential contributions from Grandeur Park Residences in our current RNAV estimates.


WILMAR INTERNATIONAL


| NEUTRAL

TARGET PRICE: S$3.73

FEB 21 CLOSE: S$3.78
CREDIT SUISSE, FEB 20

Wilmar's FY16 core net profit fell 14 per cent year-on-year to US$977 million, 22 per cent above consensus, with stronger profits from the Tropical Oils and Sugar units, and aided by a US$142 million deferred tax asset.

Excluding the tax asset, its FY16 core profit would have been only 4 per cent above consensus.

Q1 FY17 should be better as: (1) palm oil prices are up 28 per cent year-on-year in US dollars; (2) fresh fruit bunch output should improve as the impact of El Nino fades; (3) Wilmar has secured 0.5 million kilolitres in the third biodiesel tender; (4) sugar prices are rising; (5) the "oilseeds and grains" market in China appears to be more rational.

Although we believe that Wilmar will show strong Q1 FY17 results, we are hesitant to be overly bullish as there is little visibility going forward. We maintain our "neutral" rating on the stock.

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