Keppel Corporation - NDR feedback: Making ‘smart’ money

■ We recently hosted KEP’s CEO on an NDR in the US. We believe the company is a solid long-term investment candidate and is on track to regain shareholders’ trust.

■ We think Keppel Urban Solutions (KUS) could enjoy the same success as SSTEC, but on a smaller scale, with a faster turnaround time and focused on smart precincts.

■ O&M outlook is positive on sustained high oil price but we do not anticipate V-shape recovery. Operating leverage to improve on leaner operations and lower interest. 

■ KEP Land is a proxy to ride the property cycle in emerging markets, with land bank for 61,000 homes, with ROE target of 12%.

■ We lift our EPS for FY18-20F by 5-10% on higher gains in property. Maintain Add and SOP-based TP at S$10.00. Catalysts are Kep O&M recovery and special DPS.

Singapore Airlines - Yields have started to turn

• FY18 net profit of S$893m (+148% y-o-y) 14% above our expectations on lower-than-expected ex-fuel costs

• Passenger yield grew for the first time in three years

• Improving yields and stringent cost management to help offset higher jet fuel costs

• Maintain BUY with S$13.70 TP (1.2x FY19 P/BV)

Jardine Cycle & Carriage - A Southeast Asian proxy

• Jardine Cycle & Carriage (JCC), a member of the Jardine Matheson Group, offers unique exposure to Southeast Asian economies and diversified industries

• JCC owns a 50.1% strategic stake in Astra International, the largest independent automotive group in Southeast Asia

• Key risks: Exposure to underlying economic and political risks in Southeast Asia; increasing competition; commodity price fluctuations and currency risks

Yanlord Land Group - Potential restructuring to accelerate

■ Potential material change in corporate structure and strategy

■ Increasing willingness to speed up new launches at government guided price to improve asset turn

■ On-track 1Q18 results alongside positive surprise on gross margin

■ Maintain BUY on attractive valuations

Singapore Consumer Retail Staples - Shopaholic Hits The Grocery Stores

Reiterate OVERWEIGHT, as we remain optimistic on the outlook for the year on improved consumer sentiment in Singapore. Sheng Siong is our Top Pick. Also, based on our recent grocery shopping trips, we note the tight competition amongst supermarket operators have led to much improvements in product range, store-front displays and self-checkout counters – thereby greatly improving the overall grocery shopping experience.

ESR-REIT - History in the making

■ EREIT has proposed a merger with VIT (Not Rated) by way of a trust scheme arrangement. If it goes through, this would be the first M&A in S-REIT history.

■ On balance, we like the merger as it is DPU-accretive for EREIT’s unitholders. With a larger AUM, EREIT could also potentially re-rate and enjoy lower borrowing costs.

■ We maintain our Add call with an unchanged DDM-based TP.

Tianjin Zhongxin - Discount To A-Share Too High To Ignore

The spread between TJZX's China A-shares and SGX S-shares continues to widen and we believe the current 60.8% discount (wider than its five-year average) is too high to ignore. Management sees 2018 as the start of “multiple times of growth in three years” and we believe this is realistic in view of: a) the favourable industry outlook, b) ongoing price hike of its key drug, and c) fresh initiatives by the new management team. Maintain BUY with PE-based target price of US$1.72 unchanged.

Singapore Property - Room to Upgrade

■ Demand for new private homes projected to remain above historical average

■ Foreigner purchases which average c.9% of annual demand, is the wild card to fuel a further rise in prices

■ Average property unit prices expected to be S$1.9m-S$2.5m, with smaller unit sizes exacerbating psf pricing