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Best World International (BEST SP)
Tapping into technology and huge market potential
NDR note: Digitalisation, ambitious China expansion
We hosted BEST for an NDR in Singapore. Key takeaways: 1) it has set an ambitious goal to reach 5% market share or c.CNY10b of China’s CNY193b skincare market, from less than 1% in FY17E. It will continue to drive sales via expansion into more cities and focus on its 3P winning strategies (product, people, plan); 2) it is tapping into digitalisation and social media, such as WeChat and Facebook to enhance its sales; and 3) it is expanding into new markets and restoring its Taiwan market. Maintain BUY and TP of SGD1.88, based on 19x FY18E EPS (PEG of 0.7x using FY16- 19E EPS CAGR of 27%); We ascribed a c.30% discount to the PEG of 1.0x for regulatory risks and competition.
Sembcorp Marine (SMM SP)
Potential Sale Of West Rigel On The Horizon
According to rig brokers, sale of the West Rigel semisubmersible might be on the horizon, at a price favourable to SMM. The market will likely focus on continued deleveraging of SMM’s balance sheet. Our base case sees SMM’s 2018 net gearing declining further from 85% to ~70%. A re-rating of share price might occur as a result. Earnings estimates remain unchanged pending details of a deal materialising. Maintain BUY with an unchanged target price of S$2.10.
Palm oil stocks preview for Nov 2017
■ Malaysian palm oil stocks may have risen by 14% mom to 2.5m tonnes as at endNov.
■ A survey by the CIMB Futures team reveals a 1% mom rise in CPO output in Nov.
■ We project that palm oil exports likely fell by 6.4% mom in Nov on weaker demand from India, China and EU.
■ Our survey reveals that Nov’s production was stronger compared with Oct’s due to stronger-than-expected growth in output from Sabah and Pen Malaysia.
■ We maintain our sector Neutral rating and top picks – First Resources and Wilmar.
Grasping the new e-commerce reality
SINGAPORE | CONSUMER | UPDATE
Variety, price and convenience are the three main drivers for consumer purchases
Fresh products is the least vulnerable to Amazon’s threat
We maintain our Overweight view on Singapore Consumer Sector
‘Buy’ on both Sheng Siong (TP: S$1.18) and Dairy Farm (TP: US$9.89) Consumers are attracted to shopping online due to the low prices, the convenience of purchasing and delivery, wider selection, as well as ability to shop on the go or a 24/7 access. Amazon Prime’s entry to Singapore on end Jul-17 had put retailers on the hot seat
Mapletree Industrial Trust: Paradigm shift to fuel next growth phase
Check out our compilation of Target Prices