DBS GROUP HOLDINGS | BUY
TARGET PRICE: $23.30
MAY 3 CLOSE: $20.83
UOB Kay Hian Research, May 3
DBS achieved record core earnings of $1,210 million with strong growth in fee income of 15.9 per cent year on year and reduction in operating expenses of 0.6 per cent year on year.
Non-performing loans formation and specific provisions have peaked and uncertainties from exposure to the oil & gas sector have diminished.
DBS has a track record of consistency in execution and delivering good results. Maintain "buy". Target price: $23.30.
CAPITALAND COMMERCIAL TRUST | HOLD
TARGET PRICE: $1.53 UNDER REVIEW
MAY 3 CLOSE: $1.63
OCBC Investment Research, May 3
CapitaLand Commercial Trust announced it would divest 50 per cent of One George Street (OGS) and recognise an estimated gain of $84.6 million.
After taking into consideration the estimated transaction and related costs of $4.9 million, the approximate net gain is $79.7 million.
The agreed valuation of OGS for the transaction is $1,183.2 million or $2,650 per square foot (psf) based on the building's net lettable area, which is 16.7 per cent above the property's valuation as at Dec 31, last year.
Based on the asset's net property income of $38 million for the last 12 months preceding March 31, this year, the transaction valuation translates to a net property yield of 3.2 per cent an annum.
After the transaction, OGS will be owned by a limited liability partnership (OGS LLP) which is 50 per cent held by insurer FWD group, with the remaining 50 per cent held by CCT.
We believe the price for the divestment of OGS is sufficiently attractive and will increase the trust's financial flexibility to recycle capital into other projects.
SHENG SIONG GROUP | ACCUMULATE
TARGET PRICE: $1.06
MAY 3 CLOSE: $0.98
Phillip Research, May 3
We are becoming wary of the group's market share and the lack of future growth driver after nine unsuccessful HDB supermarket bids since Q3 FY16. Of the nine, FairPrice had won two, Giant won one (under Cold Storage's name), and the remaining were won by smaller competitors. We take some comfort that the irrational bidding seen in end-2016 has eased.
The recent two winning supermarket bids were at $14.3 psf and $14.8 psf, which Sheng Siong Group lost out narrowly by only 2 cents and 8 cents, respectively.
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