Compiled by Cai Haoxiang
NAM LEE METAL | BUY
NOV 29 CLOSE: $0.39
TARGET PRICE: $0.56
Phillip Securities Research, Nov 29
Net cash (cash less total borrowings) of $40.8 million represents 42 per cent of market capitalisation.
We continue using the current-asset value (current assets less total liabilities) of 37.4 cents a share to demonstrate the limited downside risk.
The outlook is stable to positive. The tone of management commentary is now more upbeat compared to previous quarters, mentioning that the recovery in the US economy could have a positive impact on the aluminium industrial product business. This refers to the aluminium frames for container refrigeration units.
Domestically, Nam Lee could potentially benefit from the pipeline of infrastructure projects and spate of collective sales. Any revenue recognition though would probably only be at least two years from now, coinciding with the tail-end of these projects.
Our target price represents 11.1 times 2018 forecast earnings and 0.96 times 2018 forecast book.
The two-cents dividend offers an attractive yield of 5.1 per cent based on the last closing price of $0.395. We currently forecast 2.5 cents of dividends for 2018 and maintain our view of Nam Lee as a yield play.
KEPPEL CORP | BUY
NOV 29 CLOSE: $7.71
FAIR VALUE: $8.41
OCBC Investment Research, Nov 29
The year 2017 was when Keppel Corp demonstrated the benefits of its multi-business strategy.
Despite the downturn in the oil and gas sector, the group delivered an 11.2 per cent year on year rise in net profit to $712.5m in 9M 2017.
Offshore and marine (O&M) broke even for most of the year, while property was the top contributor to the group's earnings at 56 per cent for 9M 2017.
This was followed by investments at 30 per cent and infrastructure at 14 per cent. In 2018, we expect property to remain the dominant contributor to earnings.
The Tianjin Eco-City project is also bearing fruit, with average selling prices of Eco-City residential land having increased significantly since 2016.
For the O&M segment, the focus will be on new order flows. Keppel Capital is also expected to continue its growth.
Meanwhile, Keppel is also establishing a new business unit, Keppel Urban Solutions, which aims to be an end-to-end integrated master developer of smart, sustainable precincts in Asia-Pacific.
We tweak our estimates and our fair value rises slightly from $8.31 to $8.41. Maintain "buy".
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