Brokers’ take
Compiled by Annabeth Leow
COAL SECTOR | OVERWEIGHT
Phillip Securities Research, Oct 11
The China authority learned lessons from last winter's coal-to-gas conversion programme.
Hence, the authorities are now slowing down the pace of reduction rather than an abrupt cut in coal consumption this year. Since the demand for thermal power could surge in the near term, the authorities still aim to ensure the profitability of domestic coal producers.
External demand favours the coal miners in Indonesia. With the increase in export target announced by the authorities, the export demand will see new highs in Q4 2018. However, the room for growth of production is limited due to the bottleneck of capacity resulting from equipment supply.
We believe this is a short-term issue, and it will take three to six months to ramp up capacity. We expect Harga Batubara Acuan to average US$100 (S$140) a tonne in Q4 2018.
We remain positive as we expect the coal price will be favourable for miners. The ramp-up of production is still on track. We maintain an "overweight" rating on the coal sector.
COMFORTDELGRO CORP | BUY
OCT 11 CLOSE: $2.14
TARGET PRICE: $2.59
UOB Kay Hian, Oct 11
Management's remarks tie in with our view that ComfortDelGro's taxi business is on the mend. The share price appears to be priced for perfection in 2018: Positives from this year have already been reflected.
Upside will stem from earnings growth in 2019, arising from recognition of earnings from acquisitions made in 2018. Given the dynamics, a mini-sell-off could be triggered if results miss expectations.
Maintain "buy" and target price of $2.59. Dividend yield remains attractive at 4.7 per cent, and its defensive nature will provide share price support.
NETLINK NBN TRUST | BUY
OCT 11 CLOSE: $0.775
FAIR VALUE: $0.90
OCBC Investment Research, Oct 11
TPG Telecom's entry, while a headwind to varying degrees for the incumbents, is positive for NetLink NBN Trust.
TPG would need to tap NetLink's fibre network infrastructure to connect a substantial portion of its base stations, potentially contributing to NetLink's non-residential and non-building address point revenue. With macro concerns ratcheting up, defensive names like NetLink have proven to be resilient.
Over the last three months, NetLink has achieved a total return of 6.1 per cent, relative to the negative 1.1 per cent and negative 2.8 per cent registered by the FTSE ST Real Estate Investment Trusts Index and Straits Times Index, respectively.
We do acknowledge the inherent concerns with NetLink's regulated business structure - for example, regulatory review risks and uncertain opportunities in growing the regulated asset base - but these are relatively unaffected by the ongoing trade tensions. We continue to stay constructive on NetLink and retain our fair value estimate of 90 cents.
Disclaimer: All analyses, recommendations and other information herein are published for general information. Readers should not rely solely on the information published and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.
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