SINGAPORE TELECOM SECTOR | NEUTRAL
OCBC Research, Sept 11
Singapore's telecom sector reported lower earnings in Q2 CY17 due to weaker performances from the under-pressure mobile segment.
We expect competition in the Singapore mobile market to intensify with the entry of TPG.
In addition, local fibre broadband operator MyRepublic announced back in July that it plans to launch mobile services in Singapore likely next month, offering generous mobile data.
The increasingly competitive landscape will impact StarHub and M1 more significantly than Singtel due to higher exposure to the market.
Hence, we cut our ARPU (average revenue per user) assumptions, projecting 14-20 per cent decline over the next five years.
However, with the recent steep correction in its share price, we upgrade M1 from "sell" to "hold" even as we lower our fair value (FV) from $1.75 to $1.65.
For StarHub, on weaker mobile earnings and pending further clarity over the ramp-up of its enterprise business, we maintain "sell" on lower $2.30 FV (previous: $2.40).
We remain positive on Singtel's long-term outlook given its growing presence in the digital space. We reiterate Singtel as our sector top pick with a "buy" rating but lower FV of $4.19.
IPS SECUREX HOLDINGS | NEUTRAL (DOWNGRADE)
TARGET PRICE: $0.09
SEPT 11 CLOSE: $0.083
RHB Research, Sept 11
IPS has made an allowance of doubtful debt of about $3 million, which involves the sale of PepperBall and related equipment to a regional customer.
We think the probability of repayment is low, as well as the fulfilment of the US$54.8 million (S$73.7m) letter of intent.
As a result, we have removed the sale from our estimates, which results in a lower DCF (discounted cashflow)-backed TP of $0.09 (from $0.34).
Certain project delays, such as the airport upgrades for Airports of Thailand, also hamper its prospects going forward.
HEALTH MANAGEMENT INTERNATIONAL | BUY
TARGET PRICE: $0.83
SEPT 11 CLOSE: $0.66
UOBKayHian, Sept 11
We continue to like HMI for its resilient operations as its staggered and paced organic expansion at both the Mahkota and Regency hospitals provide strong earnings visibility.
Moreover, HMI is riding on a favourable medical tourism outlook, which has contributed to the growth in patient load as well as high-revenue-intensive procedures.
Beyond organic expansion, we see possibilities for potential ventures in the areas of Malaysia, Singapore and Indonesia, which can be acquisitions or strategic collaborations.
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