|MAYBANK KIM ENG||UOB KAYHIAN|
Singapore Post Ltd (SPOST SP) Most sectors turning; U/G to BUY
BUY for growth and turnaround of key segments We raise our FY19-20E EPS by 1-5% and DCF-based TP 23% to SGD1.50 after lifting the growth profile for mail business and projecting a turnaround for e-commerce (See Fig 3). Accordingly, we U/G to BUY from HOLD. 2Q18 results were in line, 6M18 core earnings met 47% of ours and consensus FY17E. Evident in 2Q results was improvement in three out of four growth cylinders, including mail, e-commerce and associate earnings, which we believe will gain momentum. Logistics is the only uncertain part, but the earnings drag should be manageable. Management’s strategic review appears sound as it focuses on several low hanging fruits and also targets driving long-term growth.
Plantation – Singapore 3Q17 Results Review: Uneven Production Recovery Pattern
Post 3Q17 results announcement, companies with higher exposure to Central and South Sumatra and East and South Kalimantan revised down guidance for production growth. This was attributable to lower-than-expected FFB yield. However, we still expect BAL to hit higher 4Q production qoq and deliver the highest production growth among companies under our coverage. Thus, BAL is likely to outperform peers in 4Q17. Maintain MARKET WEIGHT.
Positives Ahead For Korean Entertainment
Spackman booked a SGD0.77m loss in 3Q17, in line with our estimate, as there were and would be no movie launches after Master in 2017. Nonetheless, it will launch two new movies in 2018, with a sturdy budget of around USD9m per feature. We expect it to acquire more related businesses that would add to its recurring income, moving forward. Also, China lifting its ban on Korean entertainment in early November could be very beneficial for the company and its talent management agency associate. As such, we maintain BUY and a TP of SGD.0.20 (79% upside).
3Q17: Miss on higher costs; await Seadrill plans
■ 3Q17 core net loss of US$2.4m was a surprise and below expectations largely on higher-than-expected costs. Projects were delayed to 4Q17F from 3Q17.
■ 9M17 core net profit accounted for only 14% of our and 16.8% of Bloomberg consensus FY17F.
■ AOD issue should close by end-17F, as it has a balloon payment due by Apr 18.
■ Maintain Reduce with unchanged TP of S$0.14, based on 0.4x CY17F P/BV. We await Seadrill update for better clarity.
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