BEST WORLD INTERNATIONAL | BUY
TARGET PRICE: $1.65 (POST SHARE SPLIT)
MAY 22 CLOSE: $1.43
DBS Group Research, May 22
We arranged several meetings for Best World over two days in Hong Kong. While most of the funds we met were new to the company, some were familiar with the industry.
After spending more than seven years cultivating the Chinese market, Best World's efforts in raising brand awareness and product acceptance are beginning to bear fruit.
With its direct-selling licence already effective in Hangzhou, much of the heavy lifting is already complete.
As Best World prepares to further penetrate its fastest-growing market, questions raised by investors focused on the direct-selling licence, motivation for the shift from an export (which has done well) to direct-selling model, and strategies to ensure sustainability.
GLOBAL LOGISTIC PROPERTIES | HOLD
TARGET PRICE: $2.75
MAY 22 CLOSE: $2.90
UOB Kay Hian, May 22
Results were in line with our expectations. Management refrained from divulging further details on the ongoing strategic review of its business.
China operating metrics softened this quarter, while plans for a China income fund remain on the drawing board.
Maintain "hold" with a higher target price of $2.75 (from $2.50), pegged at a 19 per cent discount to an increased revalued net asset value of $3.39/share (from $3.12). Entry price: $2.55.
SATS | NEUTRAL
TARGET PRICE: $5.08
MAY 22 CLOSE: $5.08
Phillip Securities, May 22
FY17 headline spike of 36 per cent year-on-year in associates/joint venture profits was due to a $15 million negative goodwill recognised in Q4 FY17.
SATS now holds a 25 per cent stake in Evergreen Sky Catering Corp (ESCC) after acquiring a further 10 per cent stake.
The stake in ESCC has now been reclassified from long-term investment to an associate; and the negative goodwill was a result of deemed increase in value of the original investment.
Share of profit of associates/joint venture growth would have been flat at 1 per cent year-on-year, in the absence of this item.
SATS has been growing both organically and inorganically. Our price target gives an implied FY18 estimate forward price-earnings multiple of 23.2 times. We are upbeat on the long-term growth, but we find valuations unattractive at current level. Investors should look to accumulate on price weakness.
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