|CIMB||MAYBANK KIM ENG|
A Gold Class acquisition
■ mm2 entered into conditional S&P agreement for 50% stake of Singapore-based GV cinema business, for purchase consideration of S$184.3m.
■ As a cinema operator with 44% market share in Singapore, GV is a prized asset that comes with quality facilities, prime locations and superior profitability.
■ At 10.5x FY16 EBITDA and 14.7x FY16 P/E, S$184.3m seems pricey relative to previous cinema acquisitions in Malaysia.
■ Stake acquisition to be funded by both debt and equity, which would raise EPS and net gearing, depending on the final financing structure.
■ Our SOP-based target price rises to S$0.72 to reflect the higher EPS; maintain Add.
Hong Kong marketing feedback
Singapore healthcare still an under-discovered space
We just concluded two days of analyst marketing in Hong Kong. Our 3 key takeaways are: 1) Despite decent YTD sector performance for the smaller counters, the sector is still under the radar due to size and liquidity factors; 2) Many investors were impressed with the expansion track record and growth plans of the smaller companies; and 3) Despite being more capital intensive with a longer gestation period for expansion, most investors favoured hospital groups, due to more resilient earnings and lower execution risks. The concerns over most asset-lightplayers are higher execution and revenue concentration risks, as well as high P/E valuations. Maintain HMI and SMG as our top sector picks.
The resurrection of Bidadari Estate
• Entities of SPH and Kajima Development came in tops in latest tender for land site at Upper Serangoon Road
• Rare mixed-use development at the new Bidadari Estate to the focal point of the new estate
• Seletar Mall could be injected into SPH REIT as the group’s capital commitments increase
• UOL Group could potentially see higher margins at Raintree Gardens site
Wilmar International (WIL SP)
Good Opportunity To Accumulate
The recent weakening of the share price is a good opportunity for investors to accumulate WIL. The drop could be due to the weakening of commodities prices and concerns over the negative soybean crushing margins in China. We remain positive on its stable long-term growth, underpinned by its key businesses and the potential value creation from the listing of its China operations. Meanwhile, 2Q is seasonally the weakest quarter. Maintain BUY. Target price: S$4.40.
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