M1 LIMITED | UNDERPERFORM
APRIL 18 CLOSE: $2.12
TARGET PRICE: $1.45
CREDIT SUISSE, APRIL 18
M1 had another weak quarter with total service revenue declining for the eighth consecutive quarter.
The decline was led by mobile, which fell 3.6 per cent year-on-year (yoy), and IDD (-10.9 per cent yoy). The strong growth (22.4 per cent yoy) in fixed network services revenue compensated for the decline in mobile revenue. M1's 1Q17 Ebitda (earnings before interest, tax, depreciation & amortisation) declined 5 per cent yoy to $79 million, 2.5 per cent below our estimates, reflecting the negative operating leverage resulting from the decline in service revenue and increased operating costs.
We believe the current stock price is not fully taking in the increasingly competitive dynamics.
KEPPEL DC REIT | NEUTRAL
APRIL 18 CLOSE: $1.23
TARGET PRICE: $1.15
PHILLIP SECURITIES RESEARCH (SINGAPORE), APRIL 18
Outlook for new demand remains encouraging until 2021. BroadGroup Consulting forecasts up to 2021 that new demand across the 10 locations, where Keppel DC Reit (KDCREIT) has a presence in, will enable growth.
The highest growth regions are Singapore, Australia and Malaysia, where the new demand compounded annual growth rate is expected to range from mid-teens to low-twenties.
KDCREIT's biggest single-country exposure is to Singapore, where new supply is expected to put pressure on utilisation this year, but long-term improvement in utilisation remains intact.
HOTUNG INVESTMENT HOLDINGS | BUY
APRIL 18 CLOSE: $1.74
TARGET PRICE: $2
RHB, APRIL 17
Hotung, a pioneer in Taiwan's venture capital industry, has an established track record of profitability. However, it has historically traded at low valuations, as the market probably has not known or understood its business model.
It typically invests in companies that are in an expansion stage of growth and makes its exit through subsequent listings or trade sales of its portfolio companies.
To date, it has successfully listed 200 companies on major bourses around the world. A 100 per cent payout policy has resulted in cumulative dividends of $70 million paid over the past five years. The stock offers attractive forward yields of about 10 per cent.
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