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Investors’ Corner (ISOTeam, IHH Healthcare, CDL Hospitality Trusts, DBS Group Hldgs)
Investors' Corner | 03 December 2015
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By: Tan Jia Hui
Articles (82) Profile

ISOTeam
Price – $0.58
Target – $0.82

ISOTeam has won a total $20.5m worth of contracts, mainly from different Singapore government bodies like the National Environment Agency as well as town councils for various areas. The contracts include works for both its addition & alteration and repair & redecorate segments and will likely contribute positively to FY16 earnings. The firm has excelled in building its orderbook, which stands at an estimated $80m to $85m, although about $30m to $35m have been utilised in the first 4 months of FY16. These projects will be progressively realised over the next 2 years, providing good earnings visibility. We understand that ISOTeam will be expanding into Myanmar with the help of its substantial shareholder and strategic partner, Nippon Paint, by end 2015. We expect another stellar FY16 ahead, coupled with more contract wins to come in the near future. Maintain BUY. RHB Research (30 Nov)

IHH Healthcare
Price – $2.14
Target – $2.52

Growth in ASEAN healthcare revenue is now at a more moderate pace. However, IHH Healthcare benefits from a diversified portfolio with Acibadem being the biggest growth driver. 3Q15 headline net profit looked bad, but was operationally better. Excluding non-core unrealised forex losses and currency, core net profit rose 16%. A strong Singapore dollar made an ordinary quarter look better than it was. Reflecting the current slow growth environment, inpatient volumes and average inpatient revenues only grew marginally in Singapore. Medical tourism remained flat with weakness in Indonesia, but was better than expected. Malaysian revenue grew a healthy 10%, mostly driven by higher average inpatient revenues, but overall performance was impaired by losses at new hospitals. While weak macros, new hospitals and higher share-based expenses slowed down earnings growth in 3Q15, we remain confident of the positive structural themes and management’s ability to ramp up capacity at new hospitals. Maintain ADD. CIMB Securities (27 Nov)

CDL Hospitality Trusts
Price – $1.32
Target – $1.41

International visitor arrivals to Singapore has shown some glimpses of recovery, with September marking the fifth consecutive month of y-o-y growth, albeit coming from a low base. CDL Hospitality Trusts (CDLHT), which derived 60% of its 9M15 gross revenue from its Singapore assets, has been impacted by the soft tourism scene. Nevertheless, it is not all doom and gloom, as CDLHT mentioned during its recent results announcement that revenue per available room for its Singapore hotels increased by 1.4% for the first 26 days of Oct-15. It remains to be seen whether this recovery is sustainable, but we are encouraged by the biennial events which will take place next year, such as the Singapore Airshow. We pare our FY15 and FY16 distribution per unit forecasts, on account of the still uncertain outlook for the local hospitality sector. Despite our reduced fair value, we now see value emerging at its current share price level and opine that the market has already priced in the negatives. Upgrade to BUY. OCBC Investment (26 Nov)

DBS Group Holdings
Price – $16.91
Target – $22.60

DBS Group Holdings is our top pick among Singapore banks, as we believe it will show the strongest earnings growth in 2016, is inexpensive, and is the prime beneficiary of higher interest rates. While we expect its non-performing loans (NPL) to rise in 2016, we believe the increase will not be significant. We believe the market has been overly concerned about its China and commodity exposure, but the results year-to-date show that these concerns are unfounded. We believe 2016 could see the formation of new NPLs peak and this could act as a catalyst for the stock. We expect its loan growth to moderate to 5% in 2016 but earnings could grow by 14%, courtesy of higher interest rates. We expect local interest rates to increase in 2016, which should benefit DBS because close to 80% of its Singapore dollar loans are pegged to floating rates, while only 10% of its local deposits are linked to market rates. Maintain BUY. Nomura (26 Nov)

Armed with a bachelor in mathematics, Jia Hui keeps close tabs on the oil & gas, and manufacturing sectors in Singapore.

Please click here for more information about this author.

ISOTeam  -- -- --   
Business: Engaged in the building maintenance & estate upgrading industry. [FY18 Turnover] Addition & alteration works (43.2%), Repairs & redecoration works (23.6%), others (21.4%), coating & painting (11.8%).

Insight: May-19, 9M19 revenue rose 62.8% with significantly... Read More
IHH Healthcare  1.840 -0.010 -0.54%   
Business: One of the largest listed private healthcare providers in Asia and worldwide. [FY18 Turnover] Parkway Pantai (64.7%), Acibadem Hldgs (31.9%), IMU (2.2%), PLife REIT (1.2%).

Insight: May-19, 1Q19 revenue rose 27.6% as a result of the... Read More
CDL Hospitality Trusts  1.630 +0.010 +0.62%   
Business: A stapled group comprising CDL Hospitality REIT and CDL Hospitality Business Trust.

Insight: Apr-19, 1Q19 gross revenue and NPI dropped 10.6% a... Read More
DBS Group Hldgs  25.040 +0.01 +0.04%   
Business: [FY18 Total Income] Institutional banking (43.7%), consumer banking/wealth management (42.9%), treasury markets and others (13.4%).

Insight: Apr-19, 1Q19 net profit rose 9% to a record $1.7b.... Read More


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