Compiled by Cai Haoxiang
SPH REIT | NEUTRAL
JULY 13 CLOSE: S$0.995
TARGET PRICE: S$1.01
Credit Suisse Research, July 13We revise our target price to S$1.01 (from S$1.04). Paragon accounted for 83 per cent of net property income for Q3 FY2017 and is one of the most popular malls on Orchard, while Clementi Mall's low occupancy cost provides support for positive reversions.
But, at 5.6 per cent yield, we believe upside is limited.
SPH REIT | BUY
TARGET PRICE: S$1.04
DBS Group Research, July 13
In a generally challenging retail market, both assets in SPH Reit's portfolio, Paragon and Clementi Mall, have been maintaining full occupancy and single-digit rental-reversion rates (versus flat for most other retail Reits). We believe it is now an opportune time for SPH Reit to consider acquiring The Seletar Mall from its sponsor.
With The Seletar Mall, SPH Reit will derive a higher proportion of its income from suburban shopping (from 20 per cent to 32 per cent), which will add to the resilience of the portfolio.
HI-P INTERNATIONAL |
JULY 13 CLOSE: S$0.96
Maybank Kim Eng Research, July 12
Hi-P started operations in the 1980s as a tooling house for electronics firms and has evolved into an ODM (original design manufacturer) and EMS (electronics manufacturing services) solutions provider.
From a recent company visit, we understand that market leaders such as Apple, Seagate, Colgate and Keurig are among its customers in wireless communications, computing and peripherals and consumer electronics sectors.
Management is optimistic in delivering profit growth with new product launches and better operating efficiency.
Hi-P's medium-term strategy is to expand to EMS for automotive and healthcare segments.
Given the long certification lead times involved in these sectors, management plans to accelerate market entry through mergers and acquisitions (M&As) with ticket sizes up of to S$100 million each over the next two years.
For the near term, management expects sales to be flattish year on year but is guiding for net profit growth from a shift towards higher component manufacturing (low revenue, high margin) over assembly work (high revenue, low margin).
Based on the FY2017 earnings forecast of a single consensus estimate, Hi-P trades at 11.8 times forward earnings versus its Singapore peer basket of 14.5 times.
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.