Compiled by Lynette Khoo, The Business Times
KEPPEL CORPORATION | ADD
OCT 13 CLOSE: $7.07
TARGET PRICE: $8.58
CIMB, Oct 12
We upgrade Keppel Corp from Hold to Add, with a new sum-of-parts target price of $8.58, incorporating a revised revalued net asset value for Keppel Land and Tianjin Eco City, as well as two times the oil and gas price-to-book value.
We came away positive from our recent non-deal roadshow with Keppel Corp to US/Canada and see value in the group's sustainable urbanisation strategy across business segments.
Keppel Corp is a safe stock to own to ride the bottoming offshore & marine cycle and the upcycle of Singapore's residential market, thanks to its early landbank inventory.
The stock has underperformed O&M peer Sembcorp Marine by 45 per cent and Singapore's major developers by 50 per cent year-to-date.
The key catalysts include: 1) stronger O&M orders, 2) 50th anniversary dividend in calendar year 2018 from active recycling of capital.
THAI BEVERAGE PUBLIC COMPANY | BUY
OCT 13 CLOSE: $0.94
TARGET PRICE: $1.07
DBS Group Research, Oct 13
Thaibev announced that its indirect wholly owned subsidiary, International Beverage Holdings (Singapore) Pte Limited, has acquired an aggregate 75 per cent stake in the shares of Myanmar Supply Chain and Service Co Ltd and Myanmar Distillery Co Ltd, both of which are incorporated in the Republic of the Union of Myanmar.
ThaiBev now seems to be in an acquisitive mode again with the recently announced acquisition of a KFC franchise for 11.3 billion baht (S$462 million).
The deal is pending completion by December 2017.
Notwithstanding the seemingly high valuation (based on our initial estimate), we believe this acquisition has a clear strategic intent to extend and diversify outside of Thailand.
Furthermore, there could be potential synergies to be reaped from distribution given that Myanmar is the largest export market for Chang Beer.
In addition, this acquisition allows ThaiBev to gain a leading position in the Myanmar spirits market. With the recent announcement that Thailand's elections are to be held in November next year, we believe optimism for consumption should pick up.
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