Keppel Corporation
Price – $6.55
Target – $6.55

Keppel Corporation (Keppel) reported 1Q17 net profit of $260.4m inclusive of $143m one-off items due to the write-back of impairments and gains on disposals. Excluding these as well as fair value gains, core net profit was $104m which was significantly below our and consensus expectations. The key drag was primarily due to the O&M segment which barely broke even at a net profit of $95,000. Property earnings were stable at $103m y-o-y despite lower revenue of $262m, with the bulk of the sales coming from China. We noted that the launch completion schedules for its projects have been pushed back into 2019 and beyond, consistent with management’s comment that home sales in China are slowing. Given the sharper-than-expected drop in O&M profit, we cut FY17 earnings estimate by 14%, and lower target price to $6.55. Maintain HOLD. UOB-Kay Hian (21 Apr)

Singapore Exchange
Price – $7.45
Target – $7.53

Singapore Exchange (SGX) posted a 6.8% y-o-y decline in 3Q17 net earnings to $83.1m, which is below Bloomberg consensus estimate of $90.3m. Despite equities and fixed income revenue rising 1.1% while market data and connectivity revenue climbed 13%, total revenue fell 1.5% to $202.7m dragged down by the 8.6% fall in its derivatives segment. This was mainly attributed to lower volume especially of the A50 contracts. As we expect volatility and uncertainty to remain given the still fairly muted corporate earnings outlook, we believe 4Q17’s results to be fairly flat in comparison to 3Q17. While STI’s rally since beginning this year was not reflected in SGX’s 3Q17 performances because of the drag from its derivatives business, we have lowered our fair value estimate marginally from $7.64 to $7.53. Maintain HOLD. OCBC Investment (21 Apr)

CapitaLand Commercial Trust
Price – $1.62
Target – $1.81

CapitaLand Commercial Trust’s (CCT) 1Q17 distribution per unit of $0.024 is in line with our expectation and made up 26.5% of our FY17E forecast, while portfolio occupancy improved slightly to 97.8% lifted by CapitaGreen. Although negative rental reversions at Six Battery Road caused passing rents to dip marginally to $9.18, we think that the market has already anticipated this. Preliminary estimates of Grade A office rents by CBRE indicated that the pace of rent decline has slowed to 1.6% q-o-q this quarter, and we believed that office rents could potentially bottom in early 2018. Despite a stellar 12% total return year-to-date, CCT’s current price implies just $1,900 per square foot (psf) and a cap rate of 4.6% for its Singapore offices, which are lower than the $2,800 psf replacement cost for a new office building as well as CBRE’s $2,700 psf estimate for the capital value of a Grade A office building. Maintain BUY. Maybank Kim Eng (19 Apr)

ComfortDelGro Corporation
Price – $2.66
Target – $2.90

We believe Singapore will see a 20% staggered public transport fare hike over 2019-20 due to the fare formula revision, though fares would stay affordable with greater direct subsidies and remain low in comparison to global developed peers. This would result in ComfortDelgro Corporation (CD) having a 21% increase in rail fares over 2019-20E. CD’s taxis segment continued to be under pressure this year, as the group guided slower rental reversion growth and its fleet declined 2.8% y-o-y in Jan-17, but we believe private-hire driver supply will shrink with the commencement of the private-hire car driver vocational licence on 1 Jul-17, shifting commuter demand back to taxis. We lower our FY17-18E earnings by 5-7% as apart from lower taxi revenue forecast, we also escalate Downtown Line phase 3 rail cost which starts operations in 2H17. Other catalyst includes the tender for the Thomson East Coast Line held in 1Q17 which would be earnings accretive from 2019 as the government would pay the operator a fee to operate the line. Maintain BUY. Deutsche Bank (19 Apr)