Singapore Exchange (SGX SP)
2QFY20 YoY Strength From FICC
Maintain NEUTRAL and SGD8.80 TP pegged to 23x FY21F P/E, 0% upside. 2QFY20 net profit grew 3% YoY to SGD99m. 1HFY20 net profit of SGD213m accounted for 54% and 51% of our and consensus FY20F – which we deem as in line. 2QFY20 SADV of SGD1.06bn was unchanged from 1QFY20.
Keppel Corp (KEP SP)
2019: Looking At A Bright Future
KEP reported a 25% yoy decline in net profit to S$707m due to the high-base effect in 2018 that was boosted by lumpy divestments and enbloc sales. Looking ahead, the outlook for the company’s business divisions appears robust property sales should continue its growth trajectory and we expect offshore & marine to continue its new order win success from 2019. We increase our earnings estimates for 2020 and 2021 by 11% and 8% respectively. Maintain BUY with a higher target price of S$7.75.
Results in line; yield remains attractive
■ 4Q/FY19 DPU of 1.00/4.011 Scts were in line with our FY19 forecasts, on the back of higher distribution of other gains.
■ Occupancies and reversions were in line with previous guidance and market.
■ Maintain Add call, with an unchanged TP of S$0.60.
ESR REIT (EREIT SP)
Cautiously Optimistic On 2020; BUY
Maintain BUY, SGD0.60 TP, 7% upside. ESR REIT’s 4Q19/FY19 results met our and Street estimates. With the industrial sector stabilising, we believe its well-diversified and Singapore-centric portfolio is well-equipped to tap into any demand uptick. Management emphasised its near-term strategy of asset recycling and extracting value via asset enhancements. One concern, however, is the sizeable SGD81m revaluation loss recorded in FY19. Valuations are reasonably attractive, at 1.3x P/BV with a 7.3% dividend yield.
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