Compiled by Stephanie Luo, The Business Times
SOILBUILD REIT | HOLD
OCT 16 CLOSE: $0.705
FAIR VALUE: $0.66
OCBC Investment Research, Oct 16
Q3 2017 distribution per unit dropped 1.8 per cent year-on-year to 23.1 per cent of our full-year forecast, which we consider to be within expectations albeit on the lower end. 9M 2017 DPU came up to 72.9 per cent of our full-year forecast.
Soilbuild Reit's trustee has issued a letter of demand to master lease tenant NK Ingredients for arrears amounting to $3.4 million and called upon an insurance guarantee amounting to $5.1 million. Soilbuild Reit received its claim on the insurance guarantee amounting to $3.4 million on Oct 10.
Pending further updates, we keep our assumption of a 65 per cent chance that NK will be unable to repay its arrears within seven days from the call of the insurance bond and will consequently have its lease pre-terminated.
M1 | FULLY VALUED
OCT 16 CLOSE: $1.805
TARGET PRICE: $1.49
DBS Group Research, Oct 16
Dividend yield has been the most critical factor for the stock price in the past.
M1's FY18F dividend yield of 5.6 per cent, coupled with potential annual earnings decline of 12 per cent over FY17F-19F, is not attractive versus Singtel's roughly 5 per cent yield with potential earnings compound annual growth rate of 3 per cent.
Circles.Life's success as a mobile virtual network operator, on top of TPG's entry late next year, further adds to the sector's woes.
Weak H217F results even before the actual launch of operations by TPG could lead to further downward revision in consensus earnings and the valuation of M1, in our view.
SAMUDERA SHIPPING LINE | BUY
OCT 16 CLOSE: $0.25
TARGET PRICE: $0.38
KGI Securities (Singapore), Oct 16
Latest trade data from China indicates that global trade is gaining strength: China's exports grew 9 per cent last month in yuan terms, while imports rose by almost 20 per cent.
The latest set of trade data from China and other major exporting markets - for example, South Korea and Taiwan - reaffirms that the near-synchronous global economic growth is picking up momentum and should be positive for shipping stocks such as Samudera.
The surprisingly resilient Baltic Dry Index is lending support to our thesis that the worst is over for Samudera's dry bulk business segment, which has been a drag on results over the past years.
Oversupply in container vessels or a drop in global trade due to increased protectionism may negatively affect shipping rates.
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