|CIMB||MAYBANK KIM ENG|
The only mega yard in Singapore in the next decade
■ In its recent UK/Europe NDR with us, SMM reiterated its S$2bn-3bn order target for 2017, comprising Gravifloat gas terminals and offshore platform/ conversion work.
■ FAQs by investors were
1) strategic review by SCI,
2) order outlook, and
3) cost competitiveness of SMM vs. Koreans.
■ We believe SMM is unlikely to be taken private or divested by SCI in the near-term given both their stretched balance sheets; status quo could be the best for now.
■ Maintain Add and target price of S$1.88, still based on 1.5x FY17F P/BV. Potential key catalysts are order win, sale of completed jack-up rigs and re-inclusion on FSSTI.
REDAS Seminar Sound Bites
We joined the Real Estate Developers’ Association of Singapore’s (REDAS) Property Market Update Seminar 2017 held on 7 Jul 2017, together with consultants and other industry participants. Contrary to a more cautious stance from the REDAS’ President in his opening address, market sentiment has improved significantly YTD, helped by strong system liquidity, and robust (record) bids in recent government land tenders. These themes, we believe, together with the abating supply across the various subsectors and supported by new economy demand drivers, continue to reinforce the investment theses for the developers and SREITs. Our large-cap BUYs remain CDL, UOL, CCT, KREIT, AREIT and MINT
Mapletree Logistics Trust: Capital recycling in motion
Singapore Market Focus
USD Rebound and Choppy Quarter for Equities
• Currency markets signal a choppy third quarter for equities – ADXY to pullback to 104.5, USDSGD to rebound to 1.41
• Sideways trend temporary – ADXY to resume recovery post pullback, STI to trade towards 3130 to 3275 in third quarter and 3350 by year-end
• Prefer yield and alpha picks during this period
Check out our compilation of Target Prices