1. Venture Corporation (Venture)
Venture continues to impress with its recent 3Q17 performance, showing a 135% year-on-year increase in profit after taxes and minority interests (PATMI) to $111.4 million.
With its strong execution of customers’ programmes and highly valuable collaborations, OCBC Research is optimistic as Venture’s diversified revenue base shows great potential.
Moreover, based on historical data, 4Q has always been the strongest quarter for the company since half a decade ago, boosting OCBC Research’s optimism for a strong FY17.
That said, dividend payouts should also increase in tandem, pushing OCBC Research’s target price for its BUY call on Venture Corporation Limited (SGX: V03) from $20.33 to $23.00.
2. Lippo Malls Indonesia Retail Trust (LMIRT)
Total net profit climbed 7.1% to $46.4 million on the back of a total revenue increase of 5.5% to $49.6 million year-on-year, contributed mainly by two acquisitions in the recent 12 months.
Despite distribution per unit (DPU) staying flat because of the effect of perpetual securities, LMIRT’s gearing ratio is at a low 28.7% and the rental reversion decline should be less severe than previously expected.
Overall, OCBC Research finds the current valuation and its long-term growth plans attractive. Furthermore, its 7.8% FY18F yield is significantly higher than other retail REITs in Singapore.
As such, OCBC Research is increasing the target price for its BUY call on Lippo Malls Indonesia Retail Trust (SGX: D5IU) from $0.455 to $0.46.
3. Yoma Strategic Holdings (Yoma)
Following its share placement exercise involving 155 million new ordinary shares at $0.53 each, Yoma is planning to allocate about 50% to 60% of the $82.2 million for real estate businesses.
Automotive and heavy equipment segment and KFC store expansion and potential new F&B investments will each take 15% to 20% of the remaining proceeds.
OCBC Research expects Yoma to take additional debts and sale of non-core assets on top of the placement exercise to fund meet its Capex requirements of US$150 million to US$200 million in the coming quarters.
Although Yoma’s expansion plans are beneficial for future growth, the share placement exercise dilutes the value in the near-term.
As such, OCBC Research gives Yoma Strategic Holdings Limited (SGX: Z59) a HOLD call for the time being with a target price of $0.55, lower than the previous $0.58.