ComfortDelGro Corporation Ltd - Inflecting back to growth!

■ Raising target price to street-high of S$3.21 (from S$2.90) on earnings inflection. In this Ideas Engine, we undertake a deep-dive analysis of the taxis and private hire car (PHC) landscape, to argue that the worst of competition is now behind us. We believe ComfortDelGro (CD) now offers compelling risk-reward, where following an EPS decline of 5.2% YoY in 2017, CD could inflect to an EPS CAGR of 6.6% for 2018-20E driven by easing taxi competition, organic growth opportunities in Rail and earningsaccretive M&A.

Asia Palm Oil Sector - New report: 1Q18—Off to a weak start

● Oil palm planters had a muted 1Q18 performance. Despite rising production volumes, lower selling prices dragged down profits. Out of the 12 companies covered, 10 disappointed while two (Sime Plant & Bumitama) were in line with our expectations.

● We expect 2018 crude palm oil (CPO) prices to trade within RM2,400-2,500/t range supported by: 

(1) Brent crude price of ~US$70/bbl, 

(2) increased domestic biodiesel consumption in Indonesia, and 

(3) price discount between CPO and other major vegetable oils (current discount between CPO & soy oil is at 6%, above its long term average).

● What to expect in 2Q18. Assuming CPO prices stay at RM2,400/t levels, we believe Indonesian companies should experience an increase in QoQ earnings as production ramps up while Malaysia may experience a flattish QoQ.

● We continue to like the upstream players. Our picks in the sector are: Sime Plant (SDPL MK), Genting Plant (GENP MK), London Sumatra (LSIP JK) and Bumitama (BAL SP).

Thai Beverage - FPL disposal the most obvious step toward lower gearing

● Thai Beverage (ThaiBev) is keen to bring down its current net debt to EBITDA of 4.7x. We believe the clearest potential disposal would be from ThaiBev's 28% stake in FPL, which has been in talks for several years.

● Previously, market expectations were that ThaiBev would swap its 28% stake in FPL for TCC's 59% stake in F&N. However, given the current level of gearing, we believe that disposal of FPL would be more effective to bring down the debt.

● ThaiBev has lowered its interim dividend in 2Q FY18 to Bt0.15 per share vs Bt0.2 per share in the previous year. With the interim dividend accounting for ~30% of the full-year dividend, this implies likely total dividend of Bt13.8 bn in FY18, only about Bt 3 bn below that in FY17.

● Maintain OUTPERFORM. ThaiBev now trades close to 1 sd below its 5-year historical average. Meanwhile, global beer and spirits peers trade at a significantly higher 25x. We adjust our estimates by -0.7% to +3.8% after factoring in the Credit Suisse estimates for FPL.

Frasers Property Limited - New report: Attractive valuations, with looming catalysts

● We initiate coverage on FPL with an OUTPERFORM rating and a TP of S$2.40, implying 30% upside.

● We believe FPL provides an attractive investment proposition comprising healthy earnings growth (14% earnings CAGR to FY19E), REIT-like dividend yields (4.7% in FY18E) and attractive valuations (0.76x P/B, 46% discount to RNAV).

● In our view, the potential free float improvement from restructuring of TCC and ThaiBev’s stakes in F&N and FPL would be a key near-term catalyst to watch. We think Thaibev’s high gearing post the Sabeco acquisition could prompt the restructuring.

● Our TP of S$2.40 is based on 30% discount to RNAV of S$3.43. In addition to the stake restructuring, other catalysts include— further capital recycling initiatives (Waterway Point could be a potential candidate by end 2018), further earnings accretive M&A, and a successful launch of its Jiak Kim Street residential project in early 2019. Key risks: Competition for land, execution risks overseas, and macroeconomic risks.

Hawkish FED weighs on SREITs and companies with high debt, underpins banks

• FED hikes rates by 25 basis points to 2%, signals two more hikes this year for a total of four

Singapore Property - Orchard Road home prices to hit S$4,000 psf ?

• Shun Tak invests S$0.6bn in two prime residential sites in Singapore

• Potential launch price could be close to S$4,000 per square foot

• Supply is picking up in the core central region; a unique offering from Shun Tak to differentiate its product is key to drive sales

Singapore Strategy - Indexed stocks well-owned

■ We recently completed our marketing trip to Tokyo and Hong Kong. Investors were generally Overweight on Singapore banks and technology (mainly VMS).

■ Names held in the country portfolios were DBS, OCBC, UOB, CD, VMS and CDL.

■ Investors generally wondered which banks to switch to from DBS given its relatively pricey valuations. There were also questions on the ‘right’ P/E to pay for VMS.

■ Among our top 3 picks of turnaround stories, investors were open to SPH (potential transformation from asset management), but less keen on ThaiBev and SingPost.

■ We reiterate our top picks: DBS, KEP, STE, UOL, SingPost, ThaiBev, Sheng Siong, China Sunsine, mm2, Yongnam, Riverstone and Sunningdale.

Sngapore Market View Update - Limited downside in a quiet week as FED set to hike rates

■ Trump-Kim summit unlikely to impact stocks given its short duration