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MAYBANK KIM ENG MAYBANK KIM ENG

JUMBO GROUP

Importing Tsui Wah Brand (JUMBO SP, CP SGD0.55, BUY, TP SGD0.70, Consumer) Jumbo has entered into a joint venture with Tsui Wah to set up a HK-style “Cha Chaan Teng” in Singapore. The brand is well-known in HK and China. This will be its first entry into the ASEAN market. The JV will open one outlet in mid-2018, before further expansion. We think this is a long-term positive as it adds another scalable brand into Jumbo’s portfolio and could leverage its established network. However, we trim FY18E EPS by 3% for additional start-up costs. Maintain BUY and TP of SGD0.70.

ST ENGINEERING

Renaissance Revival (STE SP, CP SGD3.38, U/G to BUY, TP SGD4.15, Industrials)

After three lacklustre years due to tough market conditions and restructuring costs, growth catalysts are falling in place. Aerospace is recovering; recent acquisitions hold growth promise, and the rationalisation at Land Systems and Marine divisions is largely done. The strategy to better integrate the divisions is a positive too. We adjusted FY18/FY19/FY20F profit by-5%/+7%/+14% and our DCF-based TP by 31% (previously based on 18x FY17 EPS) to SGD4.15 from SGD3.17. Upgrade to BUY from HOLD.

 OCBC  CIMB

Property Developers

Despite the robust outlook for developers, the sector is still trading at a large discount to NAV and also against historical averages. We note that during property bull-cycles, developers have traded at a premium to their NAV. For example, during the last upcycle in 2010, the forward P/B ratio of the FTSE ST Real Estate Holding and Development Index (FSTREH) reached a peak of 1.13x, while the current forward P/B ratio stands at 0.69, or 0.7 standard deviations (SD) below the 10-year average. We thus see room for further re-rating in the sector, and expect the discount gap to narrow as residential prices continue its upward trajectory.


On the contrary, the S-REITs sector is trading at relatively unattractive valuations, with a forward P/B ratio of 1.04x, or 0.7 SD above its 10-year mean. In conclusion, we believe developers offer a more attractive risk-reward proposition than S-REITs.

We are OVERWEIGHT the Singapore property sector, with a positive bias towards the residential sector. Our preferred picks are City Developments Limited [BUY, FV: S$15.91], UOL Group Limited [BUY, FV: S$10.63] and CapitaLand Limited [BUY, FV: S$4.26].

Jubilee Industries Holdings Ltd

Turnaround of plastic manufacturer for electronics

 

■ Jubilee is set to swing back into full-year positive net profit after two years of net losses post-restructuring, based on our estimates.

■ Electronic component distribution (ECD) sales rose 90% yoy in 1HFY3/18, driven by new product line acquisitions and strong demand for memory chips and MLCCs.

■ Plans for fivefold capacity expansion by end-FY19F in mechanical moulding business through both organic and inorganic means.

■ Gross margins are likely to improve moving forward, in our view, as higher-margin mechanical business turns around and expands.

■ Initiate coverage with an Add and target price of S$0.051, based on SOP valuation

 

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LionelLim8.16Check out our compilation of Target Prices




Share Prices

Counter NameLastChange
AEM Holdings0.7300.020
Alliance Mineral0.250-0.015
AusGroup0.041-
Avi-Tech Electronics0.350-
Best World Int.1.3500.010
China Sunsine1.000-0.010
DISA Limited0.0080.001
Dutech Holdings0.250-
Federal Int. (2000)0.2650.010
Food Empire0.5700.020
Geo Energy0.230-
Golden Energy0.260-
GSS Energy0.128-
Heeton Holdings0.5050.005
ISOTeam0.280-
KSH Holdings0.555-
Lian Beng Group0.5050.005
Miyoshi0.0550.001
Nordic Group0.465-0.005
Oxley Holdings0.330-
REX International0.109-0.005
Riverstone1.1700.010
Roxy-Pacific0.395-
Serial System0.1490.004
Sing Holdings0.390-0.005
Sino Grandness0.196-0.004
Straco Corp.0.7400.010
Sunningdale Tech1.3600.010
Sunpower Group0.5650.010
The Trendlines0.108-
Tiong Seng0.305-
Trek 2000 Int.0.0950.004
Uni-Asia Group1.300-
XMH Holdings0.220-
Yangzijiang Shipbldg1.1300.020

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