Business

Brokers' take

Compiled by Kenneth Lim, The Business Times

CACHE LOGISTICS TRUST

REDUCE

TARGET PRICE: S$0.74

FEB 27 CLOSE: S$0.815

Phillip Securities Research, Feb 27

Cache Logistics Trust announced the proposed acquisition of a warehouse in Melbourne, Australia for A$22.25 million (S$24.2 million).

The single-storey warehouse with ancillary office space will be fully-leased to Spotlight Group, a leading retail chain selling fabric, craft and homeware items in Australia, New Zealand and Asia.

The lease term is for another 4.5 years by net lettable area as at Dec 31, 2016, with two 6+6 years renewal options. The acquisition is expected to be completed by mid-March 2017.

Our new distribution per unit forecast for FY17e/FY18e is 6.54/7.05 cents; higher than previous forecast of 6.44/6.91 cents. Our target price is an implied 0.96x FY17e price-to-net-asset-value ratio.

VENTURE CORPORATION

BUY

TARGET PRICE: S$12.40

FEB 27 CLOSE: S$10.40

UOB Kay Hian, Feb 27

Venture's Q4 2016 results were above expectations. Revenue growth accelerated to 23.1 per cent year on year while gross margin improved 1.7 percentage point year on year to 23.1 per cent.

Revenue mix continues to shift towards the high-margin test and measurement/medical segment. Final dividend remains unchanged at 50 Singapore cents a share. Re-iterate "buy" with a higher target price of S$12.40.

GOLDEN AGRI-RESOURCES

REDUCE

TARGET PRICE: S$0.37

FEB 27 CLOSE: S$0.385

CIMB Research, Feb 26

Golden Agri's FY16 core net profit (excluding tax benefit, gain from fv changes in biological assets, exceptional loss and forex gain) of US$57 million was below our full-year net profit forecast of US$105 million and consensus of US$150 million.

The poor performance was due mainly to weaker-than-expected plantation and oilseeds earnings. The final dividend of S$0.00635 was also below our forecast.

We finetune our earnings forecasts but lower our target price (15 times historical price-to-earnings ratio) to reflect weaker earnings. Our "Reduce" call is intact due to concerns over its unexciting output prospects beyond FY17 as 44 per cent of its estates are above 19 years old and will need to undergo replanting when they are 25 years old.

A key upside risk is higher-than-expected crude palm oil prices.

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.