Brokers' take

Compiled by Kenneth Lim

NETLINK NBN TRUST | BUY

TARGET PRICE: $0.95

AUG 29 CLOSE: $0.81

DBS Group Research, Aug 29

We believe the market is concerned that a rising interest rate environment could lead to a higher yield spread in the long term.

We believe that NetLink NBN Trust has a solid investment case as its distributions are set to grow at 4.6 per cent compounded annual growth rate over FY18-20 forecast and in the longer term, benefit from potentially higher regulated returns on the regulated asset base business from 2022 onwards in case of higher cost of debt.

Initiating coverage with "buy", target price of $0.95.

NETLINK NBN TRUST | BUY

TARGET PRICE: $0.93

AUG 29 CLOSE: $0.81

UOB Kay Hian Research, Aug 29

NetLink operates the only passive fibre infrastructure to provide wholesale dark fibre services for ultra high-speed fibre connections.

It has a dominant market share of 81.7 per cent for residential and 30.8 per cent for non-residential connections, where growth is projected at a five-year compounded annual growth rate of 7.2 per cent and 10.1 per cent respectively in 2016-21.

The Smart Nation initiative also provides numerous opportunities for growth.

Initiate coverage with "buy", target price of $0.93.

WING TAI HOLDINGS | BUY

TARGET PRICE: $2.37

AUG 29 CLOSE: $2.12

OCBC Investment Research, Aug 29

Wing Tai's Q4 FY17 profit after tax and minority interests increased 406 per cent year-on-year to $9.5 million mostly due to a positive lift from taxes and higher share of profits from associates and joint ventures.

We note, however, that operating profit worsened from a $4.1 million loss in Q4 FY16 to a $12.9 million loss in Q4 FY17 due to lower contributions from property development, though the fall through to the profit before tax line was partially mitigated by a higher share of profits from Wing Tai Properties in Hong Kong.

In terms of the topline, Q4 FY17 revenues similarly fell 58 per cent year-on-year from $140.7 million to $58.6 million due to lower development contributions. Full-year FY17 profit after tax and minority interests was broadly within our expectations.

We continue to like Wing Tai for its compelling valuation (0.52 times price-to-book) and healthy balance sheet, and see it to be well positioned to benefit from firmer conditions in the domestic housing sector.

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.