Compiled by Stephanie Luo
JUMBO GROUP | HOLD
TARGET PRICE: $0.67
AUGUST 10 CLOSE: $0.56
DBS Group Research, Aug 10
We believe growth is expected to be challenged by higher costs.
The Q3 17 earnings revealed signs of higher operating costs led by rents and depreciation, while revenue has not tracked our expectations. The Q3 17 core earnings were $3.3 million (-2.6 per cent year-on-year (y-o-y)), below expectations.
Revenue was slightly below our estimates at $34.8m (+6.4 per cent y-o-y), with growth driven by both Singapore and China stores.
The disappointment came from higher than expected costs, which saw operating margins decline to 11.2 per cent (-0.7 percentage point).
New stores are expected to contribute through JVs, partnerships and franchises, but these are largely reflected in our growth projections.
Jumbo currently trades at 20x FY18F, in line with regional peers. We see earnings growing at a slower pace than consensus.
GLOBAL LOGISTIC PROPERTIES | HOLD
TARGET PRICE: $3.38
AUGUST 10 CLOSE: $3.22
CIMB Research, August 8
GLP's core earnings per share of 1.51 US cents for Q1FY3/18 was in line at 25 per cent of our FY18 forecast and 23 per cent of consensus. China benefited from rental growth and active leasing activities.
Japan was affected by income vacuum from asset sales and the US continues to see strong leasing and rental uplift.
Rising fee income is underpinned by increasing assets under management and the group is exploring options to grow in new and existing markets.
SABANA SHARI'AH COMPLIANT REIT | BUY
TARGET PRICE: $0.57
AUGUST 10 CLOSE: $0.48
Phillip Securities Research (Singapore), Aug 8
A news article by Reuters mentioned that e-Shang Redwood (ESR) is in advanced talks to buy Sabana Shari'ah Compliant Reit (SSREIT).
This resulted in the price of SSREIT to surge 10 per cent to $0.49 before a halt in trading was called.
This does not come as a surprise to us. ESR had crossed the threshold as a new substantial unitholder with a 5.01 per cent stake in SSREIT on March 3 and we had stated in our report (March 6, 2017) the possibility of a takeover by ESR.
In fact, we had first floated the idea of a takeover in our very first report (Jan 23, 2017).
Investors who had bought into our event-driven thesis would have reaped 31 per cent capital appreciation and received three distributions totalling 2.57 Singapore cents for a total return of 38 per cent over a holding period of about six-and-a-half months.
If ESR's intent is for a consolidation to reap the benefits of scale, we view the acquisition of SSREIT's assets as the more likely outcome.
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