kgi market ideas€¦ · for full reports, please contact research department at 6202 1190 or...

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WEEKLY MEETING SUMMARY - 18 February 2020 KGI Securities (Singapore) Pte. Ltd. Please see important disclosures at the end of this publication Market Indicators 12-Feb 13-Feb 14-Feb Mkt. T/O (S$ mil) 1,637.8 1,172.0 1,210.7 Stock Advances 297 202 214 Stock Declines 129 207 171 Major Indices 12-Feb 13-Feb 14-Feb DJ Ind Avg 29,551.4 29,423.3 29,398.1 S & P 500 3,379.5 3,373.9 3,380.2 Nasdaq Comp 9,726.0 9,712.0 9,731.2 Hang Seng 27,823.7 27,730.0 27,815.6 STI Index 3,220.03 Source: Bloomberg Commodities Current Price % Chge from Close Gold (SPOT) US$ / OZ 1,469.19 0.19% Oil (NYMEX CWTI|) US$ / bbl 57.81 1.78% Baltic Dry Index 1357 -0.51% Exchange Rates USD : SGD 1.3910 / MYR : SGD 2.9758 Source: Bloomberg Interest Rates 3-mth Sibor 1.713% SGS (10 yr) 1.647% KGI Securities Research Team Singapore Budget 2020. Singapore’s Budget 2020 will be announced at 3pm today. A relief package is probably in the cards for the Tourism and Transport sectors, as they are the worst hit in the current crisis. The government rolled out a S$230mn SARS relief package in 2003, accounting for 0.13% of Singapore’s economy back then. A relief packaged that is 0.1% of Singapore’s economy in 2018 would translate to around S$500mn. Hospitality & Transport stocks to watch: 1) Far East Hospitality Trust (-11% YTD) - Unit price has fallen 11% this year, the highest among the hospitality stocks given its 100% exposure to the Singapore market. The REIT now offers a decent dividend yield of 5.3-6.2% for FY20-22F. 2) CDL Hospitality Trusts (-6% YTD) – Offers 6.1% dividend yield for FY20-22F while having a more diversified geographical business. Singapore makes up 50% of its revenues. 3) Genting Singapore (-4% YTD) – Share price should be well supported by its 4.4% forecasted dividend yields and discounted valuations vs regional peers. Genting Singapore will be pulling out from the Japan casino bid, according to the Business Times. As such, the company will now have to focus growing its Singapore business where it derives 100% of sales. 4) ComfortDelGro (-12% YTD) - We have an Outperform recommendation with a target price of S$2.61 vs current price of S$2.08. Looks attractive to BUY now given its 5% div yield and recent sell-off following a 14% cut to its final dividend (2019 final dividend of 5.29 SG cents vs 6.15 SG cents in 2018) Two Different Worlds: Part Two. Chinese stock markets have rallied to pre-outbreak levels as investors expect a quick end to the public health crisis, and as monetary and fiscal stimulus are expected to fully offset the negative impact on economic growth. However, we believe equity markets may have gone ahead of fundamentals at this point, and we recommend being more cautious and not chase rallies. Stick to quality (companies with strong balance sheets and stable dividend yields; see our Fab 5 Dividend Portfolio) and precious metals. We also recommend accumulating tech-related names in semiconductor and Apple’s supply chain (see KGI Taiwan’s Strategy published on 12 Feb). KGI Market Strategy: Two different worlds: Part Two - Page 3 CapitaLand Retail China Trust (CRCT SP; Outperform; S$ 1.660): Short-term impact from coronavirus - Page 5 KGI Market Ideas KGI Market Strategy and Results Update

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Page 1: KGI Market Ideas€¦ · For full reports, please contact Research Department at 6202 1190 or sgp.researchcom@kgi.com. Strategy Singapore Market Strategy February 14, 2020 KGI Securities

WEEKLY MEETING SUMMARY - 18 February 2020

KGI Securities (Singapore) Pte. Ltd. PlePlease see important disclosures at the end of this publication

Market Indicators

12-Feb 13-Feb 14-Feb

Mkt. T/O (S$ mil) 1,637.8 1,172.0 1,210.7

Stock Advances 297 202 214

Stock Declines 129 207 171

Major Indices

12-Feb 13-Feb 14-Feb

DJ Ind Avg 29,551.4 29,423.3 29,398.1

S & P 500 3,379.5 3,373.9 3,380.2

Nasdaq Comp 9,726.0 9,712.0 9,731.2

Hang Seng 27,823.7 27,730.0 27,815.6

STI Index 3,220.03

Source: Bloomberg

Commodities

Current

Price % Chge from

Close

Gold (SPOT) US$ / OZ 1,469.19 0.19%

Oil (NYMEX CWTI|) US$ / bbl 57.81 1.78%

Baltic Dry Index 1357 -0.51%

Exchange Rates

USD : SGD 1.3910 / MYR : SGD 2.9758 Source: Bloomberg

Interest Rates

3-mth Sibor 1.713%

SGS (10 yr) 1.647%

KGI Securities Research Team

Singapore Budget 2020. Singapore’s Budget 2020 will be announced at 3pm today. A relief package is probably in the cards for the Tourism and Transport sectors, as they are the worst hit in the current crisis. The government rolled out a S$230mn SARS relief package in 2003, accounting for 0.13% of Singapore’s economy back then. A relief packaged that is 0.1% of Singapore’s economy in 2018 would translate to around S$500mn. Hospitality & Transport stocks to watch: 1) Far East Hospitality Trust (-11% YTD) - Unit price has fallen 11% this year, the highest among the hospitality stocks given its 100% exposure to the Singapore market. The REIT now offers a decent dividend yield of 5.3-6.2% for FY20-22F. 2) CDL Hospitality Trusts (-6% YTD) – Offers 6.1% dividend yield for FY20-22F while having a more diversified geographical business. Singapore makes up 50% of its revenues. 3) Genting Singapore (-4% YTD) – Share price should be well supported by its 4.4% forecasted dividend yields and discounted valuations vs regional peers. Genting Singapore will be pulling out from the Japan casino bid, according to the Business Times. As such, the company will now have to focus growing its Singapore business where it derives 100% of sales. 4) ComfortDelGro (-12% YTD) - We have an Outperform recommendation with a target price of S$2.61 vs current price of S$2.08. Looks attractive to BUY now given its 5% div yield and recent sell-off following a 14% cut to its final dividend (2019 final dividend of 5.29 SG cents vs 6.15 SG cents in 2018) Two Different Worlds: Part Two. Chinese stock markets have rallied to pre-outbreak levels as investors expect a quick end to the public health crisis, and as monetary and fiscal stimulus are expected to fully offset the negative impact on economic growth. However, we believe equity markets may have gone ahead of fundamentals at this point, and we recommend being more cautious and not chase rallies. Stick to quality (companies with strong balance sheets and stable dividend yields; see our Fab 5 Dividend Portfolio) and precious metals. We also recommend accumulating tech-related names in semiconductor and Apple’s supply chain (see KGI Taiwan’s Strategy published on 12 Feb).

KGI Market Strategy: Two different worlds: Part Two - Page 3

CapitaLand Retail China Trust (CRCT SP; Outperform; S$ 1.660): Short-term impact from coronavirus - Page 5

KGI Market Ideas

KGI Market Strategy and Results Update

Page 2: KGI Market Ideas€¦ · For full reports, please contact Research Department at 6202 1190 or sgp.researchcom@kgi.com. Strategy Singapore Market Strategy February 14, 2020 KGI Securities

MONDAY SUMMARY

KGI Securities (Singapore) Pte. Ltd.

Recent In depth Regional Reports 18/2 TH Economics: 4Q19 GDP: Poor performance with growth of +1.6% YoY

18/2 TH Commodities Update: Plunge in Libya’s crude production

18/2 TH Delta Electronics (Thailand) (DELTA TB; Outperform; TP: Bt 57.00): 4Q19 earnings review: Below forecast

18/2 TH Intouch Holdings (INTUCH TB; Outperform; TP: Bt 76.00): Still attractive with high dividend yield

18/2 TH PTT Global Chemical (PTTGC TB; Underperform; TP: Bt 47.00): 4Q19 earnings review: Below the consensus

17/2 TW Bizlink (3665 TT; Neutral; TP: NT$ 233.00): M&A announced & China production progress check

17/2 TW SerComm (5388 TT; Outperform; TP: NT$ 82.00): 2020F sales upbeat as China plant resumes operation

17/2 CN/HK A-share Weekly: Non-Hubei area virus control improves further; policy effect will support a SCI catch-up rally

17/2 TH ICT Sector (Neutral): 5G bidding finished with some surprise

17/2 TH BTS Group Holdings (BTS TB; Outperform; TP: Bt 15.20): 3Q20 earnings review: Beat expectations

17/2 TH Thai Oil (TOP TB; Outperform; TP: Bt 82.00): 4Q19 earnings review: Beat the consensus

15/2 TW Auto Parts Sector: Bargain hunt on growth & dividend plays

15/2 TW Macauto (9951 TT; Neutral; TP: NT$ 88.00): Muted 1H20F sales on coronavirus outbreak impact in China

14/2 SG KGI Market Strategy: Two different worlds: Part Two

14/2 TW Biotech Sector: What to look for during & after coronavirus outbreak

14/2 HK China Education (839 HK; Outperform; HK$ 14.20): Minimal impact from coronavirus outbreak

14/2 HK SMIC Group (981 HK; Underperform; TP: HK$ 12.00): Aiming for advanced technology growth

14/2 TH Economics: 4Q19 GDP preview: Low growth of 2.1%YoY

14/2 TH Media Sector (Neutral): Ads in January 2020 increased 2%YoY

14/2 TH KCE Electronics (KCE TB; Neutral; TP: Bt 22.50): Efficiency is a key

14/2 TH Krung Thai Card (KTC TB; Outperform; TP: Bt 48.00): Time to smooth out earnings

14/2 TH L.P.N. Development (LPN TB; Underperform; TP: Bt 4.50): Lacks turbocharger to boost residential transfers in 2020

14/2 TH SVI PCL (SVI TB; Neutral; TP: Bt 3.60): 4Q19 earnings review: Lower than forecast

13/2 TW Innolux (3481 TT; Neutral; TP: NT$ 10.10): 4Q19 a miss; order transfer beneficiary on coronavirus near term

13/2 TW Parade Technologies (4966 TT; Outperform; TP: NT$ 790.00): Embracing profitability upside

13/2 SG CapitaLand Retail China Trust (CRCT SP; Outperform; S$ 1.660): Short-term impact from coronavirus

13/2 HK Nissin Foods (1475 HK; Outperform; HK$ 8.20): Riding strong instant noodle sales in Hong Kong

13/2 TH ICT Sector (Neutral): Concern about 2600 MHz eased as DTAC will not join bidding

13/2 TH Airports of Thailand (AOT TB; Outperform; TP: Bt 86.00): 1Q20 earnings review: 7.6% above our estimate

13/2 TH Global Power Synergy (GPSC TB; Underperform; TP: Bt 80.25): 4Q19 earnings review: Core profit in-line

13/2 TH IRPC (IRPC TB; Neutral; TP: Bt 4.00): 4Q19 earnings review: Second consecutive net loss

13/2 TH MK Restaurant Group (M TB; Neutral; TP: Bt 71.50): 4Q19 earnings preview: SSSG should improve gradually

13/2 TH Siam Future Development (SF TB; Outperform; TP: Bt 7.50): 4Q19 earnings review: Another large FV adjustment gain

13/2 TH Zen Corporation Group (ZEN TB; Outperform; TP: Bt 19.00): 4Q19 earnings preview: Expansion should continue

18/2 TH Economics: 4Q19 GDP: Poor performance with growth of +1.6% YoY

18/2 TH Commodities Update: Plunge in Libya’s crude production

12/2 TW Strategy: Coronavirus fears priced in; return of confidence hinges on epidemic development

12/2 TW CHPT (6510 TT; Outperform; TP: NT$ 1,280): Insulated from coronavirus impact

12/2 TW E.Sun FHC (2884 TT; Neutral; TP: NT$ 27.00): 2020F growth more challenging on high base & coronavirus uncertainties

12/2 TW Makalot (1477 TT; Neutral; NT$ 160.00): Margin headwinds in 2020F

12/2 TW Win Semiconductors (3105 TT; Outperform; TP: NT$ 460.00): Record streak continues; coronavirus impact remains to be seen

12/2 TW Wistron NeWeb (6285 TT; Outperform; NT$ 82.00): Coronavirus fallout limited; 2H20F margin to rebound

12/2 CN/HK Stock Liquidity Monitor: Weekly data – Stock incentive & shareholding changes involving major shareholders

For full reports, please contact Research Department at 6202 1190 or [email protected]

Page 3: KGI Market Ideas€¦ · For full reports, please contact Research Department at 6202 1190 or sgp.researchcom@kgi.com. Strategy Singapore Market Strategy February 14, 2020 KGI Securities

Strategy ▪ Singapore

Market Strategy

February 14, 2020 KGI Securities (Singapore) Pte. Ltd.

A combination of high inflation and weaker economic growth is pushing China into stagflation territory in 1Q20.

Although there will be temporary supply chain disruptions, the acceleration of manufacturing plants moving out of China as multinational companies realise their over-reliance on the country, will create a more damaging and longer-term impact.

Meanwhile, Chinese stock markets have rallied to pre-outbreak levels as investors expect a quick end to the outbreak, and as monetary and fiscal stimulus are expected to fully offset the negative impact on economic growth.

Equity markets may have gone ahead of fundamentals at this point, at least from our point of view, and we recommend being more cautious and not chase rallies. Stick to quality (companies with strong balance sheets and stable dividend yields; see our Fab 5 Dividend Portfolio) and precious metals. We also recommend accumulating tech-related names in semiconductor and Apple’s supply chain (see KGI Taiwan’s Strategy published on 12 Feb).

China stagflation in 1Q20. On 10th February, China released January’s CPI (representing China’s inflation rate) which jumped 5.4% YoY, above market consensus of 4.9%. The eight-year-high inflation was due mainly to the 20.6% YoY surge in food prices. Out of which, pork prices soared by 116% and vegetable prices rose by 17.4%, according to the National Bureau of Statistics. This is most likely due to the demand-pull effect given the pre-festival rush to procure goods. Recall that the Spring Festival started early this year on 25th January, which would have resulted in workers travelling back to their hometowns around the second and third week of January, and factories having to rush production within the first two weeks of the year.

Figure 1: China CPI - Food Prices (YoY %)

Source: Bloomberg, KGI Research

Short-lived gains of PPI. On the other hand, China’s PPI turned positive (0.1% growth YoY) after declining for six consecutive months. The turn was buoyed by the Phase One Trade Deal reached in mid-January. However, given the

production shutdowns and lockdown of several cities under strict quarantine orders, the gains could be short-lived. Slow recovery. Since 10th February, Chinese companies have resumed work amid the ongoing outbreak and lockdown of cities and confinement of communities. We believe that the recovery of production will be slow and will take more than a quarter to return to normalcy. The peak of the spread is expected to be around late February according to the most recent forecasts by China’s top epidemiologist Dr. Zhong Nanshan on 11th February. In our report published last week, we mentioned that based on the current situation of the ongoing shutdown of retail malls, restaurants, tourist attractions, and other public amenities, GDP growth contributed from such segments will be impacted severely. Generally, the first quarter GDP growth is the highest for the year as the country celebrates the Spring Festival, which helps to boost consumption of goods and services. The stall in growth in consumption and the only partial recovery of production could lead to a substantial drawdown in 1Q20 GDP growth (1Q19 GDP growth: 6.4%).

Figure 2: China Passenger Auto Sales (YoY %) declined 20% YoY in January 2020. One of the first set of economic data for January showing a sharp slowdown in China’s consumption.

Source: Bloomberg, KGI Research

Recall that one of the ten themes we discussed in our 2020 Outlook was that China could sink into stagflation in 1Q20. CPI could be near to or even higher than GDP growth during the period. Meanwhile, employment will be under more downward pressure as right-sizing is the easiest way for companies to get through the current challenging period. Furthermore, China’s Ministry of Education cautioned recent graduates to expect a more challenging job market in 1H20, as the country experiences lower economic growth and confronts the virus outbreak.

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

China CPI Food YoY

-30.0

-20.0

-10.0

0.0

10.0

20.0

30.0

40.0

Mar

-15

Jun

-15

Sep

-15

Dec

-15

Mar

-16

Jun

-16

Sep

-16

Dec

-16

Mar

-17

Jun

-17

Sep

-17

Dec

-17

Mar

-18

Jun

-18

Sep

-18

Dec

-18

Mar

-19

Jun

-19

Sep

-19

Dec

-19

China Automobile Sales Passenger Car YoY (%)

Two different worlds: Part Two Joel Ng/ 65 6202 1192 / [email protected] Chen Guangzhi, CFA/ 65 6202 1191 / [email protected]

Page 4: KGI Market Ideas€¦ · For full reports, please contact Research Department at 6202 1190 or sgp.researchcom@kgi.com. Strategy Singapore Market Strategy February 14, 2020 KGI Securities

Market Strategy Singapore

February 14, 2020 KGI Securities (Singapore) Pte. Ltd. 2

Temporary global supply chain disruption in 1Q20; long-term impact of factories increasingly move out of China. According to the World Bank, China’s industry value added accounted for more than 28% of the world. Sectors like automobile, electronics, machinery, and textile that have large exposures to China will inevitably face undersupply due to the disruption of materials and parts. Although there is no accurate estimates of the impact, we believe the COVID-19 outbreak would accelerate the trend of plants and factories moving out of China, which has been ongoing over the past two years ever since the start of the trade war. Global manufacturers have since realised the challenges of relying too much on China. Thus, although the current outbreak is widely expected to end before the summer months of July to August, setting up new production lines in regions such as Southeast Asia will be an urgent consideration for companies. Stock market is supported by monetary and fiscal stimulus. To maintain the stability of financial markets, the PBOC conducted an epic liquidity injection on the same day (3rd February) that the country’s stock market reopened after a week’s postponement. On 10th February, PBOC started to provide Re-lending Funding of RMB30bn to nine major national banks and other local banks in 10 provinces. The funding is to facilitate the production and businesses related to combating COVID-19. The actual financing rate for companies is estimated to be lower than 1.6% given the up-to-3.15% one-year loan prime rate offered by financial institutions and 50% discount covered by fiscal subsidies. Meanwhile, on 7th February, China’s Ministry of Finance and State Taxation Administration laid out a series of preferential tax policies related to income tax, value-added tax, and individual income tax. The series policies include tax deduction, refund, and exemption during the pandemic period. China’s immediate combined counter-cyclical stimulus is perhaps the key reason why its stock markets have been recovering from the initial sell-off. As of 12th February, the Shanghai composite index climbed back to the level in early December 2019; and the Shenzhen composite index recovered back to the level before the official announcement of COVID-19 in mid-January. The ChiNext index (proxy of SMEs index) delivered a three-year high, basically shrugging off any impact of the current virus outbreak. The price movements indicate that markets are expecting the outbreak to end soon and for these stimulus measures to fully offset the negative impact on economic growth.

Figure 3: PBOC liquidity injection since the stock market re-opened

Source: Public sources, KGI Research

Figure 4: PBOC 7-day and 14-day reverse repo transaction

Source: Bloomberg, KGI Research

Figure 5: SHIBOR 3-Months

Source: Bloomberg, KGI Research

The disconnect between the stock market and economic performance could be tested. We are of the view that the stock market is performing far ahead of fundamentals at this time. China’s 1Q19 GDP was about RMB21.8tn. Assuming GDP is halved for a month during the outbreak period, the RMB3.6tn output losses is expected to be made up in the remaining 10 months. Before more macro data is released, no one is exactly sure of how large the damage will be. In our view, investors should be more cautious of short-term rebounds and not chase rallies during this period, as investors’ sentiment could turn sceptical of the risk-on rally upon the release of more economic data over the coming weeks. Plan of action: (1) Quality, (2) Precious Metals, and (3) Technology. We would rather stick to quality stocks with strong balance sheets that are able to support their dividend yields (See our Fab 5 Dividend Portfolio of blue-chip stocks). Our Taiwan analysts also recommend buying technology-related stocks that are riding on structural long-term trends in: (1) Industrial Automation, (2) Cloud/Data Centre, (3) Semiconductor/OLED, and (4) Apple’s supply chain. Among commodities, gold and silver are still holding up well, and are a good hedge in the event inflation returns due to the fiscal and stimulus measures that central banks will roll out in the coming months.

2

202

402

602

802

1,002

1,202

1,402

Feb

-15

May

-15

Au

g-15

No

v-15

Feb

-16

May

-16

Au

g-16

No

v-16

Feb

-17

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-17

Au

g-17

No

v-17

Feb

-18

May

-18

Au

g-18

No

v-18

Feb

-19

May

-19

Au

g-19

No

v-19

Feb

-20

PBOC Repo Injection (RMB, Billions)

2.5

2.6

2.7

2.8

2.9

3.0

3.1

3-MONTH SHIBOR (%)

Page 5: KGI Market Ideas€¦ · For full reports, please contact Research Department at 6202 1190 or sgp.researchcom@kgi.com. Strategy Singapore Market Strategy February 14, 2020 KGI Securities

RESULTS UPDATE REIT ▪ Singapore

CapitaLand Retail China Trust (CRCT SP/CRCT.SI)

February 13, 2020 KGI Securities (Singapore) Pte. Ltd.

• 4Q19 within expectations. CRCT reported 4Q19 distributable income of S$28.4mn (+19.6% YoY), mainly led by the first full quarter contributions from CapitaMall Xuefu, Yuhuating and Aidemengdun.

• Lower 4Q19 DPU due to enlarged unit base. 4Q19 DPU declined 3.3% YoY to 2.34 Sing cents due to the enlarged unit base from the private placement where 105mn units were issued on 14 Aug 2019 and preferential offering where 87mn units were issued on 3 Sep 2019.

• Maintain Outperform; opportunity to accumulate. CRCT returned -6.2% year-to-date, significantly underperforming the FTSE ST REIT Index’s +3.5% year-to-date total returns (inclusive of dividends), as concerns over the impact of the coronavirus weighed on its unit price. However, we believe this is an attractive opportunity to accumulate CRCT for its 6.6%-7.0% FY20-22F dividend yields.

4Q/FY19 review. It was busy year for CRCT as it completed RMB 3.6bn of acquisitions and RMB 0.6bn of divestments. Most recently, on 6 Feb 2020, it announced that it will be divesting CapitaMall Erqi for RMB 777mn, a 20.5% premium to its independent valuation. Full-year performance had an uplift from three newly acquired malls (Xuefu, Yuhuating and Aidemengdun). However, CRCT’s 9.90 Sing cents FY2019 DPU declined from 10.22 Sing cents in FY2018, mainly due to the enlarged unit base from the private placement and preferential offering in 3Q19. The REIT will be paying out 3.61 Sing cents, with ex-date on 14 February 2020. This implies a full-year dividend yield of 6.5% based on its current unit price. Resilient portfolio; 73% NPI from Tier 1 Cities. CRCT’s portfolio occupancy remained robust at 96.7% as at end 4Q19 as it delivered a positive 4.7% YoY rental reversion in 4Q19 and 6.4% YoY for full-year FY2019. Its gearing ratio improved to 36.7% as at end 4Q19, from 37.2% as at end 3Q19, and should further improve following the divestment of CapitaMall Erqi. CRCT’s healthy 5.0x interest coverage should allow it to increase its gearing beyond the 45% regulatory limit, giving it significant debt headroom for acquisitions, when MAS recalibrates the leverage limit.

China retail industry: Challenging 1H 2020 but look beyond. The coronavirus will have the largest short-term impact on the retail, transport, travel and hospitality sectors in China. So far, the direct impact on CRCT is the temporary closure of its Minzhongleyuan mall in Wuhan (less than 0.5% of NPI), and shorter hours for the rest of its malls. Over the next 6 months, it is likely that CRCT will have to offer rental concessions to its tenants, which we estimate may be anywhere between 1-3 months, in order to tide through this challenging period. Assuming the outbreak subsides as we approach the summer months of July and August, most sectors should recover by 2H2020.

Figure 1: Quarterly net property income trend

Source: Company Data, KGI Research

Valuation & Action: Maintain OUTPERFORM with a lower TP of US$1.66. While we acknowledge the short-term impact from the coronavirus, we remain positive on CRCT’s long-term fundamentals and on management’s pro-active strategy of recycling assets into better performing malls. Risks: Longer-than-expected impact from the slowdown in China’s retail sector due to the coronavirus. Forex risks for local investors as revenues are in RMB; this is partially mitigated by hedging 62% of undistributed income into SGD.

Financials & Key Operating StatisticsYE Dec (S$m) 2018 2019 2020F 2021F 2022FGross revenue 222.7 238.2 263.3 269.5 274.0 Net property income 147.4 165.4 181.7 186.0 189.0 Distributable income 99.7 110.8 123.0 128.7 131.4 DPU (SGD cents) 10.2 9.9 10.1 10.5 10.7 DPU growth (%) 1.2 (3.1) 2.2 4.2 1.5 Div Yield (%) 7.5 6.5 6.6 6.9 7.0 NAV per unit (SGD) 1.6 1.5 1.6 1.6 1.7 Price / Book (x) 0.9 1.0 1.0 0.9 0.9 NPI Margin (%) 66.2 69.4 69.0 69.0 69.0 Net Margin (%) 57.2 70.0 44.5 45.6 45.8 Gearing (%) 34.8 36.3 35.5 35.0 34.6 ROE (%) 3.8 3.6 6.0 6.1 6.1 Source: Company Data, KGI Research

36.7 35.9 39.8 40.4

41.1 44.1

66%64%

71%73%

69%

65%60%

65%

70%

75%

80%

85%

0

10

20

30

40

50

3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

NP

I mar

gin

(%

)

S$ (

mn

)

Net Pro perty Income (LHS) NPI margin (RHS)

Short-term impact from coronavirus Joel Ng / 65 6202 1192 / [email protected]

Outperform - Maintain

Price as of 12 Feb 20 (SGD) 1.54 Performance (Absolute)

12M TP (S$) 1.66 1 Month (%) -5.6

Previous TP (S$) 1.74 3 Month (%) -1.3

Upside, incl div (%) 14.7% 12 Month (%) 12.3

Trading data Perf. vs STI Index (Red)

Mkt Cap ($mn) 1,850 Absolute (%) 1M -5.6

Issued Shares (mn) 1,209 Absolute (%) 3M -1.3

Vol - 3M Daily avg (mn) 3.1 Absolute (%) 12M 12.3

Val - 3M Daily avg ($mn) 4.9 52 week lo $1.37

Free Float (%) 64.63 52 week hi $1.70

Major Shareholders Previous Recommendations

CapitaLand Ltd 24.2% 31-Oct-19 OP S$1.74

CapitaLand Mall Trust 11.0% 2-Aug-19 OP S$1.68

Prudential PLC 6.0% 20-Mar-19 OP S$1.61

90

100

110

120

Page 6: KGI Market Ideas€¦ · For full reports, please contact Research Department at 6202 1190 or sgp.researchcom@kgi.com. Strategy Singapore Market Strategy February 14, 2020 KGI Securities

MONDAY SUMMARY

KGI Securities (Singapore) Pte. Ltd.

STI Components and Key Metrics

Ticker Company NameLast Price

(Lcl)

Market Cap

(SGDm)

1 Day

Change

(%)

Total

Return

YTD (%)

Total Return

1 Week (%)

Div Yield

FY19F

(%)

Div Yield

FY20F

(%)

FINANCIALS

DBS SP DBS 25.55 65,420 0.5% (1.3%) 0.9% 5.0% 5.2%

OCBC SP OCBC 11.06 48,671 0.1% 0.7% 1.8% 4.6% 4.7%

UOB SP UOB 26.25 43,794 0.2% (0.6%) 1.2% 4.8% 4.9%

SGX SP SGX 9.22 9,873 0.8% 5.0% 5.3% 3.4% 3.6%

PROPERTIES

CAPL SP CapitaLand 3.72 18,758 0.0% (0.8%) 0.5% 3.3% 3.5%

HKL SP Hongkong Land USD 5.51 18,024 0.7% (4.2%) 1.1% 4.1% 4.3%

AREIT SP Ascendas REIT 3.30 11,940 0.0% 12.3% 2.8% 5.0% 5.1%

CIT SP City Development 11.17 10,130 0.3% 2.0% 1.2% 1.8% 1.8%

CT SP CapitaLand Mal l Trust 2.52 9,296 (0.4%) 3.7% 2.9% 5.0% 5.1%

CCT SP CapitaLand Comm Trust 2.08 8,024 (0.5%) 6.5% 2.0% 4.3% 4.5%

UOL SP UOL 8.23 6,943 (0.1%) (1.1%) 0.5% 2.2% 2.2%

TELECOMMUNICATIONS

ST SP SingTel 3.22 52,580 (1.8%) (4.5%) (3.0%) 5.6% 5.3%

CONSUMER SERVICES AND GOODS

JM SP Jardine Matheson USD 58.07 59,584 (0.1%) 4.4% 0.1% 2.9% 3.1%

JS SP Jardine Strategic Holdings 31.89 49,130 0.4% 4.0% 2.0% 1.1% 1.2%

THBEV SP ThaiBev 0.79 19,716 0.6% (10.1%) 3.3% 3.1% 3.4%

JCNC SP Jardine C&C 29.16 11,525 (0.1%) (3.1%) 0.1% 4.1% 4.2%

GENS SP Genting Singapore 0.89 10,671 0.0% (3.8%) 2.9% 4.4% 4.4%

DFI SP Dairy Farm International 5.40 10,156 (0.6%) (5.4%) (0.2%) 3.7% 3.9%

VMS SP Venture Corp 17.08 4,928 0.1% 5.4% 4.0% 4.2% 4.3%

SPH SP SPH 2.05 3,269 1.0% (6.0%) 2.0% 5.9% 5.9%

REIT

MCT SP Mapletree Commercia l Trust 2.34 7,740 (0.8%) (1.3%) 2.6% 4.1% 4.2%

MLT SP Mapletree Logis tics Trust 1.98 7,518 (0.5%) 14.6% 4.2% 4.1% 4.3%

TRANSPORT

SIA SP Singapore Airl ines 8.62 10,216 0.3% (4.6%) 0.5% 3.1% 3.7%

CD SP ComfortDelGro 2.18 4,721 0.0% (8.4%) (0.5%) 5.0% 5.2%

COMMODITIES

WIL SP Wilmar 4.10 26,003 0.0% (0.5%) 1.7% 2.6% 2.6%

OFFSHORE & MARINE/INDUSTRIALS

STE SP ST Engineering 4.30 13,394 0.5% 9.1% 4.6% 3.6% 3.7%

KEP SP Keppel Corp 6.72 12,206 (0.1%) (0.7%) 0.1% 3.3% 3.5%

SATS SP SATS 4.43 4,954 (2.4%) (12.5%) 0.2% 4.1% 4.2%

YZJSGD SP Yangzi jiang SGD 1.00 3,899 (0.5%) (11.2%) 2.6% 4.7% 4.6%

SCI SP Sembcorp Industries 2.04 3,637 0.0% (10.9%) 0.5% 2.0% 2.7%

Dividend Yield based on Bloomberg consensus. Total return includes dividends. Source: Bloomberg

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MONDAY SUMMARY

KGI Securities (Singapore) Pte. Ltd.

CompanyResults

Ann DatePeriod DPS Ex-Date

Book

ClosePayable

Yield

(%)

STI Hutchison Port Holdings Trust 10-Feb-20 FY19 HKD 0.05000 17-Feb-20 18-Feb-20 27-Mar-20 USD 0.166 11.1

Lendlease Global Commercial REIT 10-Feb-20 2Q20 SGD 0.01290 17-Feb-20 18-Feb-20 16-Mar-20 SGD 0.910 -

Ascendas India Trust 30-Jan-20 3Q20 SGD 0.00640 18-Feb-20 19-Feb-20 27-Feb-20 SGD 1.740 3.3

British & Malayan Holdings 10-Feb-20 1H20 SGD 0.01500 18-Feb-20 19-Feb-20 10-Mar-20 SGD 2.600 2.1

Micro-Mechanics Hldgs 8-Feb-20 2Q20 SGD 0.0500 18-Feb-20 19-Feb-20 28-Feb-20 SGD 1.870 5.3

Singapore Post 7-Feb-20 3Q20 SGD 0.0050 18-Feb-20 19-Feb-20 28-Feb-20 SGD 0.870 4.0

Ireit Global 12-Feb-20 FY19 SGD 0.0271 19-Feb-20 20-Feb-20 27-Feb-20 SGD 0.875 6.6

Prime US REIT 12-Feb-20 FY19 USD 0.0315 19-Feb-20 20-Feb-20 30-Mar-20 USD 1.040 -

Far East Hospitality Trust 14-Feb-20 FY19 SGD 0.009500 21-Feb-20 24-Feb-20 27-Mar-20 SGD 0.660 5.8

Silverlake Axis 13-Feb-20 2Q20 SGD 0.0040 21-Feb-20 24-Feb-20 6-Mar-20 SGD 0.375 4.8

Tai Sin Electric 12-Feb-20 2Q20 SGD 0.0075 26-Feb-20 27-Feb-20 6-Mar-20 SGD 0.335 6.7

Lum Chang Holdings Ltd 13-Feb-20 2Q20 SGD 0.00300 27-Feb-20 28-Feb-20 12-Mar-20 SGD 0.360 5.0

Source: SGX Annoucement / Bloomberg

Share Price

14 Feb 20

Latest Dividend Entitlements Announcement

Appendix 1: Corporate Action

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MONDAY SUMMARY

KGI Securities (Singapore) Pte. Ltd.

17-Feb 18-Feb 19-Feb 20-Feb 21-Feb

Q4 SG Q4 Q4 Q4

*Q4

24-Feb 25-Feb 26-Feb 27-Feb 28-Feb

SG SG SG Q4 Q4

Q4 Q4 Q4 *Q4

*Q4 *Q4

*Q4

2-Mar 3-Mar 4-Mar 5-Mar 6-Mar

Q4

9-Mar 10-Mar 11-Mar 12-Mar 13-Mar

*Q3

16-Mar 17-Mar 18-Mar 19-Mar 20-Mar

Global Invts > iFAST Corp >

Megachem > Perennial Real

Estate Hldgs > Roxy-Pacific

Hldgs > Sasseur REIT >

StarHub > Wilmar Int'l

CNMC Goldmine Hldgs > OCBC

> UOB (Both before mkt open) >

Sembcorp Industries >

TeleChoice Int'l

BreadTalk Grp > Raffles

Medical Grp > Spore

Technologies Engineering

Delfi CapitaLand > China Aviation

Oil Spore > City Devpts > CSE

Global > Thakral Corp

First Resources > SIIC

Environment Hldgs

Sinarmas Land

Golden Agri-Resources > Hiap

Hoe > Ho Bee Land > Hotel

Royal > IFS Capital > Mewah

Int'l Inc > Uni-Asia Grp > UOL

Grp

Dairy Farm Int'l Hldgs >

Hongkong Land Hldgs >

Jardine Matheson > Jardine

Strategic Hldgs > Mandarin

Oriental Int'l

ARA US Hospitality Trust >

Great Eastern Hldgs > Lippo

Malls Indonesia Retail Trust

KrisEngery > LHT Hldgs > Olam

Int'l

Del Monte Pacific

Sembcorp Marine

Eagle Hospitality TrustBudget 2020

(Jan 2020) CPI

For General Households4Q19 GDP(Not later than 25 Feb)

(Jan 2020) Index of Industrial

Production

Cromwell European REIT

FridayMonday Tuesday Wednesday Thursday

AP Oil Int'l > EC World REIT >

Emerging Towns & Cities

Spore > mDR > Stratco Corp >

Venture Corp

Appendix 2: Financial Calendar

* Tentative

Source: Bloomberg

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MONDAY SUMMARY

KGI Securities (Singapore) Pte. Ltd.

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