FOOD EMPIRE HOLDINGS | BUY
TARGET PRICE: $0.78
MARCH 2 CLOSE: $0.585
UOB KAY HIAN, MARCH 2
The 2016 results came in within our expectations, completing the comeback from a break-even year in 2015.
The group has declared a dividend which came as a surprise, signalling management's confidence.
We are optimistic about Food Empire's fortunes moving forward due to a stable Russian rouble, strong growth prospects in Indochina and proven pricing power in the Commonwealth of Independent States region.
Maintain "buy" with an unchanged price-earnings ratio-based target price of $0.78.
QAF LIMITED | HOLD
TARGET PRICE: $1.46
MARCH 2 CLOSE: $1.42
OCBC INVESTMENT RESEARCH, MARCH 2
Following QAF's FY16 results, we are cognisant of the potential cost pressure ahead, as outlined by the company.
While feed grains prices are expected to be favourable for the year, the company highlighted the risk of higher utilities costs and flour prices in certain markets.
Its primary production segment may also see lower average selling price and pressure on margins amid broader market developments, as well as expansion-related costs, while profits may be subject to income tax going forward.
After a good run-up in share price and a lack of near term catalysts, we are downgrading the stock from "buy" to "hold" with unchanged fair value estimate of $1.46 at this juncture.
Nonetheless, we remain positive on the company for the longer term, given the formation of an executive committee, meaningful expansion plans and potential strategic initiatives.
HO BEE LAND LIMITED | ACCUMULATE
TARGET PRICE: $2.64
MARCH 2 CLOSE: $2.25
PHILLIP SECURITIES RESEARCH, MARCH 2
At 0.55 price-to-net-asset-value ratio (P/NAV), Ho Bee Land (HBL) trades at a bigger discount to the peer average (market capitalisation is greater than $1 billion) of 0.69.
We opine that interest in high-end properties is returning as the divergence in prices between Singapore's and regional high-end property widens. The returning interest should narrow the P/NAV gap in HBL's share price.
Given such, we narrow our discount to revalued net asset valuation from 40 per cent to 30 per cent.
We maintain our "accumulate" call on HBL with an increased RNAV-derived target price of $2.64 (from $2.20).
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