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Top 5 Analysts’ Calls For The Week
In the Spotlight | 25 July 2014
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By: Jonathan Khoh
Articles (26) Profile

CapitaCommercial Trust (Target Price:$1.67) HOLD

  • CapitaCommercial Trust (CCT) reported 2Q14 distributable income of $64.1 million – 7.6 percent higher year on year. This cumulates to a YTD distributable income of $124 million, which is within expectations and make up 51 percent of our FY14 forecast. 2Q14 DPU is 2.18 cents, which is 5.3 percent higher than the 2.07 cents paid in 2Q13.
  • The growth in distributable income over the quarter was mainly due to higher contributions from assets, lower interest expenses and the release of retained tax-exempt income distribution.
  • Portfolio occupancy remained stable at 99.4 percent as of end 2Q14 versus the previous quarter. As a result of continued rental reversions, CCT’s average committed office portfolio rentals increased marginally QoQ from $8.22 to $8.23.

By: OCBC Research

Ezion (Target Price:$3.00) BUY

  • Despite announcing as many as 7 new contracts in 2014 YTD in addition to making changes to 4 of its existing contracts to make them more value accretive, and increasing its fleet size to 36 vessels, Ezion’s share price has moved sideways as its strategy to create value for investors while continuing to grow strongly is being under-appreciated by investors, in MER’s view.
  • MER sees robust 50 percent  upside in Ezion’s share price from current levels as the company delivers 37 percent profit compounded annual growth rate over 2013-16E which should lead its PE multiple to compress to 6.8x 2015E and 5.7x 2016E. MER’s estimates for 2015 and 2016 are 7 percent and 12 percent ahead of consensus.
  • A value buy with risk-reward strongly in favour: MER believes the current share price does not reflect the pace of fleet growth, impending profitability and reduced leverage. MER recommends Ezion for long-term value buyers.

By: Macquarie Research

First REIT (Target Price:$1.21) HOLD

  • For 1H14, revenue and DPU grew 20.9 percent and 11.1 percent to $45.5 million and 3.99 cents, forming 48.8 percent and 48.1 percent of our FY14 forecasts, respectively. This was within our expectations as we expect a full quarter of contribution to come in from its recently completed acquisition, Siloam Hospitals Purwakarta (SHPW), in 3Q14. Looking ahead, FREIT does not expect the result of the Indonesian presidential elections to impact the healthcare industry in the short to medium term. As both presidential candidates highlighted their support for universal healthcare coverage.
  • Management has recognised the risk of future interest rate spikes and has acted promptly to address this issue. It recently secured a  $165 million Transferable Term Loan Facility (TLF) which allows it to refinance its outstanding floating rate loans to a fixed rate basis at an all-in cost of ~3.7-3.8 percent. Its debt maturity will also be stretched from 2016 to 2017-2019. FREIT will not have any refinancing needs until 2017. All its debt will also be on a fixed-rate basis.
  • FREIT’s share price has appreciated 16.0 percent YTD and 18.8 percent since we upgraded it to a ‘Buy’ on 16 Sep 2013. With the stock trading at 1.3x FY14F and FY15F P/B, we believe valuations are now unexciting, although the stock still offers a decent FY14F and FY15F dividend yield of 6.7 percent and 7.0 percent, respectively. Given the limited upside potential return, we downgrade the stock to HOLD.

By: OCBC Research 

Genting Singapore  (TP:S$1.72) BUY

  • Marina Bay Sands (MBS) reported a 2Q14 adjusted EBITDA of US$418 million, up 18 percent year on year mainly due to a favourable VIP and mass win percentage. We believe that Resorts World Sentosa (RWS) should continue to take market share in the VIP segment as MBS is making a conscious decision to be conservative on credit and incentives.
  • Meanwhile MBS’s mass business is restricted in its ability to grow because of the lack of rooms and this could be a key differential next year, where RWS will have the advantage of a new 500-room hotel in the Jurong Lake District.
  • This new hotel and new investment opportunities around the region are potential key catalysts. No change to our RNAV-based target price and EPS forecasts. Add rating maintained.

By: CIMB Research

Tiger Airways (Target Price:$0.30) SELL

  • Tiger Airways Holdings’ (TR) Singapore operations improved Quarter on Quarter in 1Q15 on the back of peak travel period and active capacity management – passenger load factor (PLF) edged up gradually by 7.1 percent from 79.2 percent in Mar-14 to 86.3 percent in Jun-14.
  • We believe improved PLF year on year can be sustained for Tigerair Singapore in FY15. First, TR will not be taking on new plane deliveries in 2014-2015 after cancelling its nine A320 orders in Mar-14, thus providing room to absorb previous capacity growth. Second, we think the four planes returning from now-defunct Tigerair Mandala will be grounded. Third, fleet expansion is also scaled back by rivals.
  • We think the improving PLF will only help TR’s performance to bottom out in FY15 but still insufficient for a turnaround. Though fleet expansion is moderated, SE Asia’s LCC fleet is still projected to grow by a high 17 percent in 2014 according to CAPA. Hence, downward pressure on yield and thus margins is likely to stay.

By: OCBC Research

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.

Please click here for more information about this author.

CapitaLand Commercial Trust  2.070 +0.02 +0.98%   
Business: Co is a real estate investment trust in the office space.

Insight: Apr-19, 1Q19 gross revenue and NPI rose 3.5% and 3... Read More
Ezion Hldgs  -- -- --   
Business: Co develops, owns, and charters offshore assets to support the offshore energy markets. [FY17 Turnover] Liftboats (49.7%), Jack-up Rigs (39.5%), Offshore Support Logistic Services (10.8%).

Insight: Aug-18, 1H18, Co returned to the black with a net ... Read More
First REIT  1.010 -0.010 -0.98%   
Business: Co is a healthcare real estate investment trust. [FY18 Geographical] Indonesia (96%), Singapore (3.4%), Korea (0.6%).

Insight: Apr-19, 1Q19 gross revenue was slightly down by 0.... Read More
Genting Singapore  0.915 -0.010 -1.08%   
Business: Develops, operates & mkts casinos & IRs globally, including Australia, M'sia, Philippines & UK. [FY18 Turnover] Gaming (66.1%), non-gaming (33.8%), others & invs (0.1%).

Insight: May-19, 1Q19, despite Co's non-gaming business reg... Read More

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