Compiled by Kenneth Lim
RAFFLES MEDICAL GROUP | SELL
TARGET PRICE: $1.12
AUG 1 CLOSE: $1.21
Maybank Kim Eng Research, Aug 1
We downgrade the stock to "sell" as: (1) Singapore's growth missed again for the third straight quarter and underlying weakness is structural in our view; (2) management guided for much higher than expected start-up losses for its China hospitals that could erode up to 30 to 40 per cent of group earnings before interest, tax, depreciation and amortisation.
As a result, we cut our FY17-19 estimate earnings per share by 3 to 38 per cent for FY17-19 estimate and our discounted cash flow-based target price by 27 per cent to $1.12 (weighted average cost of capital 7.1 per cent; long-term growth 1.5).
Raffles Medical trades at a price-earnings ratio of 40 times FY18 estimate, with a profit decline outlook for the next three years.
SINGAPORE AIRLINES | HOLD
TARGET PRICE: $10.10
AUG 1 CLOSE: $10.49
UOB Kay Hian Research, Aug 1
The lower decline in Q1 FY18 passenger yield appears to be supported by positive foreign exchange movements, which offset lower base yields.
Singapore Airlines (SIA) is less negative on yield but did not guide for an improvement.
This will not impact our estimates as our numbers have factored in a 0.6 per cent rise for FY18 and 1.4 per cent for the rest of the year.
We raise our FY18 core earnings estimate by $79 million as we factor in stronger loads, and raise our target price by one per cent to $10.10.
Maintain "hold". Entry price: $9.10.
MAPLETREE GREATER CHINA COMMERCIAL TRUST | BUY
TARGET PRICE: $1.25
AUG 1 CLOSE: $1.11
DBS Group Research, Aug 1
We maintain our "buy" call with target price of $1.25.
We believe the market will likely react positively to the news that tenant sales have finally turned the corner, reducing the risk of negative rental reversions.
In addition, we continue to like Mapletree Greater China Commercial Trust (Magic) for its attractive valuations, offering a prospective FY18 yield of 6.7 per cent.
Furthermore, with most large-cap Reits trading close to or at a premium to book value, Magic also offers a compelling switch, trading at an 11 per cent discount to book value.
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