Mapletree Commercial Trust
Growth with downside protection
■ MBC II is ripe for acquisition. On a base-case scenario, the acquisition would raise FY20-21F DPU by about 4.8-4.9% and total return to a strong 17%.
■ We expect stronger reversion for VivoCity and MBC I. Lower supply and AEI benefits VivoCity; MBC I to see stronger demand from decentralisation.
■ MCT is now our preferred retail REIT, given its growth potential and consistent DPU growth. Maintain Add with a higher target price of S$1.94.
Wilmar International (WIL SP)
Back to Basics
Over 28 years, Wilmar has grown from just a palm oil refiner and trader to one of the global leaders in the processing and merchandising of agricultural products with a strong presence across 33 countries (mainly emerging markets such as China, India, Indonesia, Indochina and Africa). Soon, its China operation will be listed on the Shanghai Stock Exchange and is potentially the largest vegetable oil and food ingredient producer with a market cap of US$12b-13b. Maintain BUY. Target price: S$3.90.
Singapore Exchange Limited
Derivatives growth the slowest in almost two years
SINGAPORE | FINANCE |UPDATE
HKEX announced the launch of futures contracts on MSCI China A Index.
SGX’s February Derivatives Daily Average Volume (DDAV) growth was flat at 1.4% YoY, the lowest in almost two years. SGX’s derivatives business accounts for c.49% of total revenue in 6M19.
We downgrade to Accumulate at a lower TP of S$8.17 (previously S$8.36) and lowered our FY19e earnings by 2%. We peg our TP to 23.2x P/E, at SGX’s 5-year mean.
Dairy Farm (DFI SP)
Accumulate For Longer Term; Upgrade To BUY
Upgrade to BUY from Neutral with new USD8.25 TP, from SGD8.64, 11% upside plus 3% yield. It has been challenging for the supermarket/hypermarket division over the past four years. Share price saw a sell-down after the group made major write-downs and provisions to this division in 4Q18. YTD, share price has plunged 19%, underperforming the STI considerably. We believe share price is at its trough, and long-term investors may look to accumulate the stock at its low.
Check out our compilation of Target Prices