SIA Engineering Company
Price – $4.08
Target – $3.75
SIA Engineering Company (SIAEC) lately announced that its existing joint venture with Pratt & Whitney (P&W), Eagle Services Asia, has been selected as the maintenance, repair and overhaul (MRO) facility in Singapore for P&W PW1100G-JM GTF engines, which is one of the two engine options that power the A320neo aircraft family. The single-aisle A320neo aircraft family has fast growing demand with the proliferation of low cost carriers around the world, with a backlog of 4,937 A320neo aircraft firm orders which are yet to be delivered. This indicated the expected strong growth in demand for the MRO services of the GTF engines over the longer term. We see SIAEC’s partnership as one of the key drivers for future growth. Maintain HOLD. OCBC Investment (3 Jul)
Thai Beverage Public Company
Price – $0.90
Target – $1.10
As Thailand’s volume of beer sales has registered an increase of 5% and 10% y-o-y in April and May 2017 respectively, we believed that beer consumption has normalised post-Songkran and that the mourning effects on beer sales are now behind us. According to management, Thai Beverage Public Company (ThaiBev) has maintained its 40% market share in the beer segment as at Apr-17, and hence 2H17 is expected to see positive growth in beer volumes. With the new excise tax coming into place in Sep-17, we anticipate the agents to stock up on spirits inventories in anticipation of a tax hike. On that note, ThaiBev may use this opportunity to raise prices for its spirit products and thus experience a gross margin expansion. Reiterate BUY. RHB Research (3 Jul)
Price – $1.15
Target – $1.23
Keppel REIT (K-REIT) entered into an agreement to purchase a 50% interest in a premium office tower that will be developed at 311 Spencer Street, Melbourne, Australia. The building, upon completion of construction in 4Q19, will be leased to the local government for 30 years. With an average net property income yield of 6.4%, the property is DPU accretive over the medium term. However, near term DPU dilution is expected due to increased borrowing costs to fund the investment without a corresponding income stream as the building is still under construction. While gearing is likely to rise above 40%, we continue to like K-REIT for its attractive valuation at 0.8 times price-to-book and an exposure to the recovery in the Singapore office market. Maintain BUY. DBS Vickers (30 Jun)
Oversea-Chinese Banking Corporation
Price – $10.69
Target – $11.70
Oversea-Chinese Banking Corporation (OCBC) has agreed to acquire National Australia Bank’s private wealth business in Singapore and Hong Kong at about one time price-to-book, as well as launched its onshore private banking in Indonesia through 85%-owned OCBC NISP. Meanwhile, OCBC and subsidiary Great Eastern Holdings have jointly announced that they are conducting a strategic review and have received proposals from several parties regarding their combined stakes in United Engineers (UE) and WBL Corporation (WBL). OCBC has a consistent strategy of divesting of non-core assets and re-investing in its core wealth management business and high-growth emerging markets such as Indonesia and China. Proceeds from the divestment of its stakes in UE and WBL, if materialised, would also be re-invested in its core businesses. Maintain BUY. UOB-Kay Hian (28 Jun)
We managed to invite a few popular names in the finance and investment education world to speak at our upcoming Shares Investment Convention on 16 September 2017 (Saturday)!
They’ll be covering topics on personal finance, macroeconomics and investment strategies to help retail investors make more shrewd decisions especially in the current uncertain and volatile economy. Click on the button above to learn more and grab your early bird tickets. See you there!
P.S. Don’t forget to enter promo code “SHARES10” for a $10 discount!