Compiled by Stephanie Luo
SINGAPORE REITS | NEUTRAL
OCBC Investment Research, August 22
All the 24 S-Reits (real estate investment trusts) under our coverage reported Q2 FY17 results that were within our expectations.
On average, distribution per unit (DPU) growth was flat on a year-on-year basis, which was a moderation from the 2.4 per cent increase registered in Q1 FY17 but similar to the flattish performance for last year.
Further compression in S-Reit yields remains a possibility in the near-term, but recommend investors to buy on dips as valuations remain stretched. Since we added CapitaLand Mall Trust (CMT) (Buy; fair value: $2.20) into our top picks list on June 5 on the premise that it was a potential laggard play, its price has jumped 8.4 per cent. Given this outperformance, we replace CMT with OUE Hospitality Trust (Buy; FV: $0.82).
Our other top picks remain the same: Frasers Centrepoint Trust (Buy; FV: $2.28), Keppel DC Reit (Buy; FV: $1.39) and Frasers Logistics & Industrial Trust (Buy; FV: $1.22).
BEST WORLD INTERNATIONAL | BUY
TARGET PRICE: $1.88
AUGUST 22 CLOSE: $1.185
Maybank Kim Eng Research, August 21
Best World operates under the export business model in China and aims to convert into a direct-selling model starting at year end. We note that any delay in conversion will not impact the operations as it is only a change in accounting policy with limited earnings impact.
The benefits of its China direct selling licence are mainly: better profile to attract more customers and to prevent issues with the local authorities.
UNI-ASIA GROUP LIMITED | BUY
TARGET PRICE: $1.92
AUGUST 22 CLOSE: $1.395
KGI Research, August 21
Q2 17 profit after tax and minority interests increased 180 per cent year-on-year to US$2.7 million (S$3.7 million) as its shipping business segment returned to a net profit of US$2.6 million compared to a loss of US$2.4 million in Q2 16.
Uni-Asia generated US$6 million of operating cash flow in H1 17, the highest in five years.
The Baltic Dry Index (BDI) has risen above the 1,200 levels for the third time this year amid a recovery in iron ore and coal prices.
We note the recovery in BDI is also due to the better supply-demand dynamics of dry bulk vessels; orders as a percentage of total tonnage have declined to a more sustainable level.
Uni-Asia is positioned to ride the growth in its three business segments as we expect a dry bulk shipping recovery, completion of its second Hong Kong property and an increase in hotel rooms under its operations.
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