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Top 5 Analysts’ Calls For The Week
In the Spotlight | 17 June 2014
By: Jonathan Khoh
Articles (26) Profile

SingTel (Target Price:$4.08) BUY

  • Acquires two more digital firms, Adconion for US$209 million cash – a multi-channel digital advertising solutions like mobile, video, email, display and social across all devices on a unified platform – and Kontera for US$150 million – a digital content intelligence and market technology company that has the capability to analyse data in real time, thus allowing advertisers and agencies to make real-time decisions about their brands and marketing campaigns to achieve better returns.
  • According to management, Adconion (which posted US$185 million in revenue in FY13) will contribute to amobee’s topline, while Kontera will boost amobee’s technical capabilities. While the acquisitions will help SingTel further its Digital Life strategy of being the global leader in mobile-led digital advertising space (US$100 billion global market opportunity in 2017 according to eMarketer), the integration may take some time to bear fruit.
  • Separately, the recent move by Chinese e-commerce giant Alibaba to take a 10.4 percent stake in SingPost for $312.5 million would see SingTel’s 26 percent stake easing to 23 percent. We opine that the partnership between Alibaba and SingPost could also benefit SingTel, as it could open the door for the telco to the Chinese market; not so much in the traditional telco space but more in e-services and digital advertising.

By: OCBC Research

Ezra Holdings (Target Price:$1.48) BUY

  • Ezra’s share price has underperformed the FSSTI by 20 percent YTD, making it one of the three worst-performing O&M stocks in Singapore. Given the more stringent offshore maintenance programme under the new management and its vessels’ gradual return to work, we think that Ezra’s offshore division’s earnings troughed in 2Q14.
  • Subsea, on the other hand, turned in positive net profit for three consecutive quarters with no major hiccups due to consistent orders secured. We think that Ezra’s share price is at an inflection point and see limited downside.
  • We upgrade Ezra from Reduce to Add, following our 3-16 percent increase in FY14-16 EPS, on higher margins. We forecast a 67 percent year on year rise in FY15 core EPS but this is still 10 percent below consensus. We think that P/BV is a better reflection of Ezra’s valuation due to its volatile earnings in recent years. The potential catalysts are stronger orders and margins.


Singapore Post (Target Price:$1.86) BUY

  • In a price-competitive industry where the winner takes all, having Alibaba as a strategic partner will ensure that SingPost can scale up and obtain sufficient volumes to become the lowest cost provider.
  • Furthermore, Alibaba’s decision to partner SingPost rather than other regional logistics providers reaffirms the company’s leading position in e-commerce logistics.
  • We maintain our Add rating and DCF-based target price of $1.86 (WACC 7.1 percent). The potential key catalysts are rising e-commerce activity and potential M&As. 

By: OCBC Research

UMS Holdings (Target Price:$0.56 ) SELL

  • UMS started trading on an ex-bonus basis on 5 Jun. In the absence of news flow and with a steady STI, its ex-bonus share price should have been near $0.728. Instead, share sales by both its major shareholders brought down its share price to $0.66 on that day’s close.
  • Are the major shareholders signalling a return of the semiconductor industry’s downturn? For prudence’s sake, we revert to 1.19x CY14 P/BV (a still generous valuation at the high end of its last earnings upturn) to value the stock (previously 1.38x, average of last 2 up cycles) and normalise dividends back to 5 cents.
  • We adjust our EPS for its recently completed 1-for-4 bonus issue and downgrade the stock to Reduce from Hold, with de-rating catalysts expected from a possible earnings downturn in 2H.


Gallant Venture (Target Price:$0.57) BUY

  • Inflection point on the horizon, landbank value may be unlocked. It has been a long wait as financial crises slowed Bintan’s development timeline but currently, our checks show that Lagoi Beach Village is complete and ready to open in 2H14.
  • An ultimate resort tourism environment, Bintan Resort 3.0 seems ready. The inflection point is now on the horizon as new renowned resorts open. Momentum may snowball, to finally realise the value of its 14,000-hectare landbank. Establishment of an airport could accelerate Bintan’s development.
  • Synergistic business rides the wave, providing recurring income. Gallant’s business arms on Bintan are highly synergistic, riding on this wave together. As activities on Bintan grow, industrial park rental and captive utilities customers on Bintan and Batam will grow as well, providing stable recurring income. Hence, the new airport and Bintan Resort 3.0 will actually help all of its Bintan businesses.


Driven by passion in investments, Jonathan’s research emphasizes in incorporating critical thinking with value and income investing surrounding companies listed in Singapore. Well trained in banking and finance, Jonathan has intern experience at various industry players including GIC Pte Ltd.

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