Brokers' take

Compiled by Angela Tan



APRIL 3 CLOSE: $0.945

Maybank Kim Eng, April 2

Excessive concerns about e-commerce disruptions led to 12-month underperformance of 10 per cent against the Straits Times Index, despite its results resilience.

SSG continues to offer grocery-shopping convenience, focusing on fresh foods in densely-populated HDB estates, where more than 80 per cent of Singapore's residents reside.

We resume coverage with a Buy rating, expecting catalysts from: 1) further improvements in consumer spending; 2) SSG's further market-share wins from convenience stores and traditional market grocers; 3) a potential surge in new stores in 2018; and 4) continued good results, supporting high return on equity (ROE) and dividends.

We have also not included potential contributions from its new store in China, opened in Q4 2017.



APRIL 3 CLOSE: $7.73

CGSCIMB, April 2

KEPPEL Land China will recognise around $270 million of gain from divestment of 100 per cent stake in Keppel China Marina Holdings after clearing objections by a minority shareholder. We expect Q1 2018 earnings to be supported by the gain.

Offshore and marine may reach almost break even without kitchen-sinking provisions. Catalysts ahead include: 1) a successful sale of delayed rigs to unlock working capital; and 2) higher dividend potential from more asset recycling in the property division.

The stock is cheap at 1.1 times its estimated FY18 price to book value, below its 20-year average of 1.7 times. We believe ROE bottomed in FY17 and is set to recover on the back of minimal capital expenditure and earnings growth.



APRIL 3 CLOSE: $1.44

CGSCIMB, April 2

KDCREIT has completed the acquisition of maincubes DC in Offenbach am Main, 10km from Frankfurt. We had expected the acquisition to be completed in end-June; we now input an additional three months of contribution from this asset.

We lift our FY18F-20 forecast distribution per unit (DPU) by 3.5-5.9 per cent, mainly because we previously assumed maincubes would be funded by equity, instead of debt.

We like Keppel DC Reit for its exposure to positive fundamentals of data centres as well as acquisitive growth. Downside risk could come from higher-than-expected rate hikes. There are minimal lease expiries in FY18-19 forecast.

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