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Investors’ Corner (Venture Corporation, Wing Tai Holdings,Mapletree Greater China Commercial Trust, SMRT Corporation)
Investors' Corner | 06 February 2014
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By: Peter Ng
Articles (81) Profile

SMRT Corporation
Price – $1.19
Target – $1.08
SMRT’s 3Q14 net profit fell 44% y-o-y to $14.2m, and fell marginally q-o-q. Revenue inched up to $293m, led by higher ridership and rental income but was outstripped by elevated costs. EBIT margin fell by 4.5 ppt y-o-y to 6.9%, but was similar to 2Q14. 9M14 profit is only 62% of our full year estimate. Group’s EBIT continued to be supported by non-fare revenue segments such as rental and advertising while combined EBIT grew 14% y-o-y to $25.4m. The Public Transport Council recently approved a 3% increase in fares with effect from 6 Apr-14, with the remaining 3.4% rolled over to next year. While this is a positive development for SMRT, we also expect higher operating expenses given the requirement to maintain higher service standards and minimise disruptions. This could negate the positive impact of higher fares. After the recent disruptions to train service and ill-timed announcement of the fare increase, SMRT will have to focus more on service reliability and preventive maintenance. This could pressure earnings further. Maintain FULLY VALUED. DBS Vickers (29 Jan)

Mapletree Greater China Commercial Trust
Price – $0.81
Target – $0.97
Mapletree Greater China Commercial Trust booked $65.7m revenue in 3Q14, 10% better than forecast, while net property income was ahead by 13% at $53.8m and distribution income by 17% at $40.6m. 9M14 profit is 78% of our full year estimate. The better-than-projected results were driven by higher operating income, cost savings, and lower interest expense. Distribution income translated into 1.52 cents per unit or 7.5% annualised yield. Income growth was driven by higher contributions from Festival Walk and Gateway Plaza in Beijing. Festival Walk enjoyed positive rental reversion of 20-22% with tenant sales growing 5.6% in 9M14 and 6.6% higher shopper footfall. There was slight frictional vacancy at Gateway Plaza but the property remained popular with 97% occupancy in Jan 2014. It benefited from a 78% rental uplift from expiring leases in 3Q14. More importantly, rents are being renewed at Rmb320-360/sqm per month in this micromarket despite weakness in the Beijing office market. About 7% of leases at Festival Walk and 1% in Gateway Plaza are due for re-contract in FY14, and another 19% and 9% respectively in FY15. Upgrade BUY. DBS Vickers (27 Jan)

Wing Tai Holdings
Price – $1.78
Target – $1.88
Wing Tai’s share price has fallen close to 20% in the last three months, and we think it is time to revisit the stock on valuation grounds. In our view, stagnant sales for Wing Tai’s high-end projects are likely to slow down its capital recycling process. In particular, more than 90% of Le Nouvel Ardmore and Nouvel 18 remain unsold. This is slightly mitigated by The Tembusu, which has a low land cost and was 66% sold as of 7 Jan-14. We also noticed that Wing Tai has been largely absent in the recent land bids, despite its depleted landbank. While we view this positively given the high land cost and weakening private residential volume in Singapore, it also means a further slowdown in sales momentum. With FY14 net gearing at 9%, Wing Tai has a strong balance sheet which will enable it to undertake further investment when the opportunity arises. Its current valuation is also undemanding at 0.47x FY14 P/BV. This is below its historical average of 0.82x and also the lowest among Singapore peers. Upgrade HOLD. CIMB Securities (25 Jan)

Venture Corporation
Price – $7.62
Target – $8.70
The 3D printing industry is still fluid on the back of recent developments which led us to believe that demand is likely to grow faster going forward given the push by industry players into new market segments for 3D printing. Revenue contribution in FY14 from Venture’s 3D printing business segment is expected to fall in the low-single-digit percentage and a more substantial high-single in FY15. The company has built resiliency in its business by paring down its volatile consumer businesses. No one customer now accounts for more than 15% of its total revenue in any one period. Following substantial disruption in 2010-2012, merger and acquisition activities among its customer base are petering out and only their residual effects will remain in FY14. Venture has its stage set for better growth, with life sciences being another potential growth driver. Other than 3D printers, the life sciences business is also set to grow faster. Maintain BUY. Maybank Kim Eng (22 Jan)

Backed by a strong interest in investments, Peter's research spans across a range of industries, with his focus placed on companies listed on the SGX.

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Venture Corp  15.200 +0.15 +1.00%   
Business: Co provides technology services, products and solutions. [FY18 Turnover] Advance Manufacturing & Design Solutions (AMDS) [74.6%], technology products & design solutions (TPS) [25.4%].

Insight: Apr-19, 1Q19 revenue rose 8.5% to $928.8m due to b... Read More
Wing Tai Hldgs  2.080 -- --   
Business: Singapore-based property developer and lifestyle company. [FY18 Turnover] Development properties (51.5%), retail (36.5%), investment properties (9.6%), others (2.4%).

Insight: Feb-19, 1H19 revenue rose 7.1% to $193.9m largely ... Read More
Mapletree North Asia Commercial Trust  1.330 +0.040 +3.10%   
Business: Real estate investment trust focused on commercial assets (comprising retail & office) in HK & China.

Insight: Apr-19, FY19 revenue rose 15.1% due to higher rent... Read More

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