Neo Group
Price – $0.58
Target – $0.61

Neo Group’s food manufacturing segment has finally turned operationally profitable in 3Q17. However, the group registered a 6.5% decline in its food catering revenue, and we suspect that there has been a drop in market share during the quarter. Going forward, we think that the slowdown in Singapore’s economy would cause further tightening of recreational budgets for both corporate and private social events. Hence, given that the food catering segment is still Neo Group’s most profitable business, we believe that muted growth and weaker margins in this segment would negatively impact the group’s overall earnings. Downgrade to NEUTRAL. RHB Research (10 Feb)

SATS
Price – $4.98
Target – $4.60

SATS achieved a 7.4% growth in 3Q17 net profit with positive contributions from the gateways services unit and gateway services associates, which benefitted from Hanjin bankruptcy leading to a modal shift from sea freight to air cargo. Operating costs rose faster than revenue mainly due to higher staff costs, while raw material costs declined despite the weaker Singapore dollars as raw materials were sourced from various countries and prices were locked in advance. The group does not foresee an improvement in pricing for catering and gateway operations, and expects operating leverage to come from increased automation. We believe that most of the positives from cost control have been fully factored in, and SATS’s ability to produce positive results in the coming quarters will be challenging given the high base effect and possibly normalisation of air cargo volume. Maintain HOLD. UOB-Kay Hian (10 Feb)

Singtel
Price – $3.84
Target – $3.70

Singtel’s 3Q17 revenue fell 1.5% y-o-y while underlying net profit climbed 4.2% boosted by a stronger Australian dollar. Net profit was in line with our estimate, and is a much better result than its rivals which were hit by cost or capital expenditure issues, as well as dividends cuts or outlooks. However, given stiffer competition in FY18, we expect stable performance at best. Fortunately, Singapore Consumer accounts for only 15% of the group’s revenue and earnings before interest, tax, depreciation and amortisation. Meanwhile, government-mandated Initial Public Offer for NLT by April 2018 could also bring about potential capital returns to shareholders. Maintain HOLD. Maybank Kim Eng (10 Feb)

Perennial Real Estate Holdings
Price – $0.805
Target – $1.05

Perennial Real Estate Holdings’ (PREH) FY16 net profit fell 40% to $35m mainly due to lower net fair value gains and lower revenue. Excluding net fair value gains, FY16 net profit fell to $0.3m. Meanwhile, Chengdu Healthcare Hub is expected to open by 3Q17, and PREH’s values lie in its vast integrated projects in strategic locations across the main transportation hubs in China. Currently trading at 0.5 times price-to-book ratio, we are of the view that it has priced in most of the uncertainties on its ambitious expansion plans, execution risks on its development projects, and realisation of its development value. Therefore PREH’s share price offer massive upside as it gradually realises its revalued net asset valuation. Maintain BUY. DBS Vickers (9 Feb)