Compiled by Angela Tan
M1 | SELLTARGET PRICE: $1.63
JAN 25 CLOSE: $1.89
Maybank Kim Eng, Jan 24
Maintain "sell" as we expect competitive intensity to increase as TPG and MyRepublic launch their services this year.
Management disclosed that postpaid subscriber base under contract is about 70 per cent.
This contracted proportion is lower than our expectation of about 90 per cent as a result of weak iPhone demand and the increased popularity of SIM-only plans.
Assuming this trend prevailed industry-wide, it would provide an opening for new entrants, such as TPG and MyRepublic, to try and poach revenues, if not subscribers, from the incumbents.
We expect tariff pressure to emerge on currently higher-priced wireless data plans as new operators reveal their offerings this year and intensify further in 2019E.
The upside risk to our sell rating is benign competition.
CAPITALAND MALL TRUST | NEUTRAL
TARGET PRICE: $2.10
JAN 25 CLOSE: $2.10
RHB, Jan 25
Overall, the retail environment continues to remain challenging amid changing consumer trends and high incoming retail supply.
While CapitaLand Mall Trust (CMT) has proactively taken steps to mitigate these threats, we expect weakness on its rental growth to persist.
The key game changer ahead is the successful transformation of Funan Mall, which is positioned as the mall of the future.
CMT's valuation seems fair, with a FY18 forecast yield of 5.4 per cent and price-to-book value of 1.1 times. We maintain our neutral recommendation.
SUNTEC REIT | BUYTARGET PRICE: S$2:30
JAN 25 CLOSE: S$2.14
DBS Group Research, Jan 25
We maintain our non-consensus buy call on Suntec Reit with a target price of $2.30.
We, like most sell-side analysts, were blindsided by Suntec's past performance and missed the 30 per cent share price rally last year.
But we believe the rally has more to go from now as we now have greater confidence in chief executive Chan Kong Leong's ability to engineer a turnaround at Suntec mall, having done a deep dive into the property and identified easy wins to improve the mall's performance.
With a multi-year upturn in office rents on the horizon, we also argue that Reits with office exposure should trade above book value, as seen in the past.
Over the years, there has been speculation of Suntec being privatised by Suntec's sponsor, ARA Asset Management and its partners.
We believe that ARA, now backed by Warburg Pincus/Avic Trust, has the resources to privatise Suntec if the market undervalues Suntec.
Assuming an offer price at our target price of $2.30, we estimate ARA could generate an internal rate of return of 10 per cent.
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