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Venture Corporation

What’s next after a record year?


■ We expect Venture to beat FY17 consensus forecasts when the company reports its results on 28 Feb 2017.

■ The recent acquisition of a freehold property in the US will help Venture build its cluster of excellence in the US.

■ Venture will benefit from proximity to customers and targets new technologies/products from US customers.

■ Investors should also watch for signalling effect from FY17 dividends.

■ We raise our target price due to our more optimistic forecasts and a higher P/E target of 17.7x (0.5 s.d. above its 11-year historical average P/E of 15.5x).


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Memtech International (MTEC SP)

Looking To A Strong 2018


In its upcoming 4Q17 results announcement, Memtech is likely to report a decent performance. Going into 2018, Memtech has indicated new project wins from Chinese automobile companies and a rosy outlook for the consumer electronics segment with new projects from major customer Beats and a new customer which is a major US consumer electronics company. Maintain BUY with a higher PE-based target price of S$1.43 (previously S$1.33).


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DBS Group (DBS SP)

A Strong Franchise


EPS and TP raised; maintain HOLD for growth & yields

Post-results, we remain positive on DBS’s ability to generate robust earnings growth. While FY17 results missed our expectation on lower income and higher provisions, the core business remains solid, i.e. higher net interest income (+7% YoY) and net fee and commission income (+12% YoY). We expect cost efficiency gains from its ongoing digitalization efforts (i.e. branch distribution network, data architecture, and shift to “digital” customers). We revise est.’s with sustainable ROE now 14.3% (11.6% previously), COE 10.5% and growth 3.5% (unchanged). Our TP is raised 30% to SGD29.66 based on ~1.6x FY18E P/BV (from 1.2x previously), slightly above 1.5SD above its historical mean of 1.2x for higher ROEs. We like DBS for its strong earnings growth and healthy yields. Given the sharp share price appreciation of 5.3% yesterday, we maintain HOLD for now but would accumulate at lower levels.


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Singtel: Opportunities amid market volatility


Singtel’s 9MFY18 operating revenue grew 6.5% YoY to S$13.21b largely driven by Australia Consumer (+4.3%) and Digital Life (+112.4%). 9MFY18 EBITDA rose 4.5% to S$3.85b, which is largely in-line with our expectations as it met 75% of our FY18 forecast. However, 9MFY18 share of associates’ pre-tax profits fell 10.6% YoY to S$1.94b on lower contribution from Airtel and NetLink NBN Trust. Consequently, 9MFY18 underlying NPAT declined 5.2% YoY to S$2.74b, and met 71% of our FY18 forecast. Looking ahead, we reiterate our positive view on Singtel’s longer-term outlook given its focus to grow its cyber security, ICT solutions capabilities, digital advertising and other digital-related businesses. Singapore Consumer business landscape remains challenged but we are encouraged by Australia Consumer results. However, on fairly muted contributions from associates ahead, we adjust our forecasts slightly downwards and reduce our FV from S$4.19 to S$4.15. Based on the closing price of S$3.40 on 8 Feb 18, we find Singtel’s valuations attractive, supported by FY19F dividend yield of 5.1%. Coupled with a positive long-term outlook, we reiterate BUY on Singtel.


Moya Holdings Asia

Major Catalysts Ahead From New Assets


We visited Moya’s water treatment plants in Jakarta, which it acquired in 2017, and came away positive on its outlook. It is now Indonesia’s largest water treatment operator. It could likely see greater cost savings due to its improved position in negotiating on piping, chemicals and manpower. We also expect Moya to acquire more entities in the near term, as it aims to achieve 20,000 litres per second in capacity this year. The restructuring and potential extension of its concessions could also significantly boost to its prospects. Maintain BUY, with a SGD0.17 TP (91% upside).


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  • Lionel Lim