Compiled by Kenneth Lim
The Business Times
GENTING SINGAPORE | BUY
TARGET PRICE: $1.17
FEB 23 CLOSE: $1.03
OCBC INVESTMENT RESEARCH, FEB 23
We are encouraged by the reduction in impairment of receivables relating to VIP gaming since the group calibrated its credit policies and commission structure.
Furthermore, we highlight the management's optimism on delivering sustainable earnings growth and their marketing focus on growing regional premium mass business.
Investors should also note that the group's disposal of its 50 per cent equity interest in an associate, Landing Jeju Development, in January 2017 will likely be reflected as a gain on disposal of about $96.3 million in the Q1 FY17 results.
The management team has executed strongly by spearheading initiatives to maintain their competitive advantage in a challenging environment - for instance, The Maritime Experiential Museum is scheduled to undergo a complete renovation and is set to re-open with all-new content in end-2017, while this year's Art at Curate series will feature a new concept with a line-up of Michelin starred chefs.
After adjusting our valuation model to reflect the latest earnings beat and a firmer operational outlook, our fair value estimate increases from $0.88 to $1.17. Upgrade to "buy".
SEMBCORP MARINE | HOLD
TARGET PRICE: $1.61
FEB 23 CLOSE: $1.815
UOB KAY HIAN RESEARCH, FEB 23
Sembcorp Marine (SMM) reported Q4 FY16 net profit of $34.3 million, reversing from a loss. Core net profit for 2016 was $107 million, in line with our expectations.
No new contracts were announced for Q4 FY16, which points to a troubling earnings outlook should the drought continue. Net gearing was higher at 113 per cent, but we are not overly concerned. Our 2017-18 earnings are revised by 2 per cent and 23 per cent.
The hazy earnings outlook leaves SMM a trading play at best. Maintain "hold". Entry price: $1.45
BEST WORLD INTERNATIONAL | ADD
TARGET PRICE: $2.97
FEB 23 CLOSE: $2.09
CIMB RESEARCH, FEB 22
Huge earnings beat. Q4 FY16 net profit (+231 per cent year on year) blew past our expectations. FY16 formed 114 per cent of our and consensus full-year forecasts.
Best World's twin growth engines (Taiwan and China) continue to drive the group and we do not see them slowing down. Final dividend of three Singapore cents declared. Two-for-one share split proposed.
We raise our FY17-18F earnings per share (EPS) on higher sales growth in both Taiwan and China. Our current EPS and target price do not yet account for the proposed share split.
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