Compiled by Angela Tan
VENTURE CORPORATION | ADD
TARGET PRICE: $30.81
MARCH 5 CLOSE: $26.80
CGS-CIMB, March 3
We like Venture as the company has transformed itself from being a price-taking contract manufacturer to becoming the preferred manufacturing partner of its clients.
We expect Venture to continue delivering 21 per cent year-on-year (yoy) core earnings per share (EPS) growth in FY18 forecast and 13 per cent yoy growth in FY19 forecast, to be driven by better margins and product launches by its customers.
Venture has a strong net cash balance sheet and recent capital expenditure suggests that it still sees room for growth. Our target price is based on 17.7 times FY19 price/earnings ratio versus an average 17 per cent core EPS growth over FY18-19 forecast.
DBS | BUY
FAIR VALUE: $32.53
MARCH 5 CLOSE: $28.00
OCBC Group Research, March 5
Since we raised our fair value estimate on Feb 1, the stock has moved up from $26.61 (on Feb 1) to as high as $29.63 (on Feb 26), a gain of 13.4 per cent in less than a month.
DBS Bank has consistently stayed as our top pick in the banking sector, and it has recorded a stellar gain of 15.9 per cent year-to-date, outperforming the Straits Times Index.
Based on US Federal Reserve chair Jerome Powell's latest comment, most economists are now expecting four Fed hikes in 2018.
With the re-rating of Asian banks, which are now trading at 1.6 times book, we believe that DBS deserves to trade at the same or higher valuation.
We have raised our valuation to 1.7 times book, bringing our fair value estimate from $29.50 to $32.53.
CITYNEON HOLDINGS | BUY
TARGET PRICE: $1.54
MARCH 5 CLOSE: $1.04
KGI Securities, March 5
Cityneon will continue to expand its traditional core business (design & build) and is expecting to do so at the upcoming World Expo 2020 in Dubai.
Moving forward, the management also intends to move up the value chain of the creative business, by providing more design services (higher margins) and less of building/construction (lower margins).
Since our initiation report in November last year, our investment thesis for Cityneon has not changed. We still like the company for its growth prospects and like it that the management was able to deliver a strong set of results in 2017.
We have factored in revenue contributions from the digital signage at Treasure Island, Las Vegas' Avengers exhibition, and maintained a total of eight exhibition sets for FY2018.
Our revised target price of $1.54 is based on a FY2018F EPS of 11 cents and a FY2018F P/E of 14 times, representing a 20 per cent discount to its peers for its short track record.
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