UOL GROUP | OUTPERFORM (INITIATE)
JUNE 5 CLOSE: $7.26
TARGET PRICE: $9.00
Credit Suisse Equity Research, June 5
With valuation at an attractive 0.69 time price to book, steady earnings growth from recognition of locked-in residential sales and its recurring income base, and control over United Industrial Corporation (UIC) a key catalyst, UOL is our preferred play on the continued recovery in Singapore's residential market.
We think UOL is well poised to ride the upcycle, given its astute landbanking ability and strong project execution capabilities.
This is complemented by its sizeable recurring income base, which at 85 per cent of assets in 2016 is the highest among its peers.
SINGAPORE REITS | NEUTRAL
OCBC Investment Research, June 5
With major equity indices trading at relatively high valuations and given the continued tightening of bond yield spreads, coupled with ample liquidity in the markets, we see room for further tightening in S-Reit yield spreads in the near-term, but urge investors to be selective by adopting a prudent bottom-up stock picking strategy.
Currently, the FTSE ST Reit Index is trading at a forward yield spread of 391 basis points (bps) against the Singapore Government 10-year bond yield, which is approximately 0.9 standard deviations below the five-year average (427 bps).
Besides Frasers Centrepoint Trust, Keppel DC Reit and Frasers Logistics & Industrial Trust, which we reiterate as our preferred sector picks, we also add CapitaLand Mall Trust (CMT) into this list.
CMT has underperformed its peers and the broader sector year-to-date, and we believe headwinds facing the group have been priced in.
SILVERLAKE AXIS | ADD
JUNE 5 CLOSE: $0.54
TARGET PRICE: $0.65
CIMB Research, June 2
Silverlake's insurance processing subsidiary Merimen has officially launched its newest offering, TrueSight Analytics.
TrueSight provides insurers with comparative analysis of parts pricing, labour pricing and turnaround time among vendors and service providers.
The data can be used to benchmark, measure and improve claims indicators. Merimen won the first customer for this product in Indonesia and is now extending TrueSight to its regional customer base.
Although our core earnings per share forecast for FY2017 is affected by the tax impact on one-off items, there are no other changes to our FY2018-19 forecasts. Our "add" call and discounted cash flow-based target price of $0.65 (weighted average cost of capital: 11.4 per cent) are intact. Downside risk is longer-than-expected recovery in customers' orders.
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 arising from any use of the information published herein.