Brokers' take

Compiled by Lynette Khoo, The Business Times

SINGAPORE POST LTD | HOLD

OCT 12 CLOSE: $1.265
TARGET PRICE: $1.22

Maybank Kim Eng, Oct 11

SingPost opened its new retail mall, SingPost Centre, on Oct 9 after two years of redevelopment.

This has doubled its gross retail floor space to 269,000 sq ft and net lettable area to 178,000 sq ft.

It has achieved a healthy occupancy rate of 80.4 per cent, helped by its convenient location - next to Paya Lebar MRT interchange station.

It is set to invigorate Paya Lebar Central, which is rapidly transforming into a major commercial hub under the Urban Redevelopment Authority's master plan.

The mall houses up to 130 stores, including leading brands in fashion, dining, entertainment, fitness and children's enrichment.

It is managed by CapitaLand under a contract.

SingPost Centre also highlights SingPost's embracement of how technology is changing the retail landscape.

We expect an additional rental income of $22 million, which translates to $13 million earnings at steady state of 90 per cent occupancy.

For FY2018, SingPost Centre should contribute $3 million of earnings (3 per cent of total) and $13 million of earnings (10 per cent of total) for FY2019.

We maintain "hold" and a discounted cashflow-based target price of $1.22, pending clearer direction from the strategic review of its business strategy.

SPACKMAN ENTERTAINMENT GROUP | BUY

OCT 12 CLOSE: $0.119
TARGET PRICE: $0.20

RHB Research Institute, Oct 11

Spackman has announced the acquisition of Take Pictures for a total consideration of $3.9 million, payable via $590,000 in cash and the issuance of 25.7 million new Spackman shares at a premium price of $0.13 a share.

It also bought back Spackman Media Group shares at US$3 (S$4.06) a share, for a total of US$2.7 million, payable by issuing 28.45 million new Spackman shares, also at $0.13 a share.

With the expected dilution, our target price dips to $0.20 (from $0.23, 67 per cent upside).

But with its greater capacity to produce more movies coupled with the strong pipeline of new movies to be launched next year, we maintain our "buy" call on the stock.

We believe that management may likely acquire more companies in an effort to reshape its business model and diversify its revenue stream, as well as secure more recurring revenue.

We believe the share price has fallen quite sharply and is now at an attractive level.

This, coupled with the greater capacity to produce more movies as well as a strong pipeline of new movies launching next year, underpins our positive view on it outlook.

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