Featured Reports

Sheng Siong Group Ltd – New stores + Market share + Higher margins = Record profits

Paul Chew | Phillip Securities Research Pte Ltd | Nov 1, 2019 243

3Q19 revenue was within our expectations. Net earnings exceeded our estimates due to better gross margins and other income (grants). New stores drove revenue growth of 11% in 3Q19 and gross margins were better than expected due to higher fresh food sales mix.
Sheng Siong (SSG) secured another three new stores in for 4Q19/1Q20. The cumulative six new stores will expand footprint by 8% and support revenue growth in FY20e.
We bumped up our FY19e earnings by 2% due to higher margins and other income. Our ACCUMULATE recommendation is maintained. Together with the rise in FY19e earnings, our target price is raised to S$1.32 (previously S1.30). New stores, market share gains and higher margins are translating to record earnings for SSG despite sluggish consumer spending in Singapore.

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APAC Realty Ltd – Will be better in 2020

Paul Chew | Phillip Securities Research Pte Ltd | Nov 18, 2019 57

3Q19 net profit was below our estimates.
Apart from the weaker transaction volumes, net profit in FY19 has been hit negatively by agent license subsidy fee and losses at the newly acquired property. The combined financial impact is negative S$2mn.
We lower our recommendation from BUY to ACCUMULATE. Our target price is reduced to S$0.55 (previously S$0.68). We cut our FY19e and FY20e net profit forecast by 15% and 13% respectively. We expect a recovery in 2020 as property transactions build up momentum, there is also a robust pipeline of new projects.

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Singapore Telecommunications Ltd – Operationally sound

Alvin Chia | Phillip Securities Research Pte Ltd | Nov 18, 2019 71

EBITDA met our estimates while NPAT was hurt by Airtel’s exceptional item. Excluding exceptional item, NPAT would have fallen 15% YoY and within our expectations. Airtel was impacted by an adverse court ruling against the industry’s definition of adjusted gross revenue and recorded a provision of S$5.5bn (Singtel’s pre-tax share is S$1.9 bn).
Stronger performance in regional associates especially for Globe & AIS. Telkomsel returned to sequential quarter growth, Airtel narrowed losses. Enjoyed first YoY PBT growth in 3yrs.
Group enterprise weak due to challenging business environment and slowdown in Australia.
Maintained ACCUMULATE with a lower TP of S$3.31 (prev. S$3.45). We revised FY20e EBITDA and NPAT downwards by 9%/56% due to the results and change in guidance.

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PropNex Ltd – Bottomed out

Paul Chew | Phillip Securities Research Pte Ltd | Nov 18, 2019 69

3Q19 results were in-line with our estimates. With the recovery in property transactions, we expect earnings to have bottomed out.
New launches have been driving revenue growth (+16% YoY) whilst private resale remains very weak (-30% YoY).
We expect PropNex to pay attractive dividends (yield of ~7%) in view of the low capital intensity of the business and cash hoard of S$74mn in the balance sheet.
Our BUY recommendation and target price of S$0.59 is maintained. We favour PropNex for their impressive market share (46% in new launches), attractive valuation, high unleveraged ROE (20%), healthy balance sheet and recovering transaction volumes in the Singapore residential market.

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Technical Pulse

Technical Pulse: Amazon Inc
Oct 1, 2019
Technical Pulse: McDonald’s Corp
Aug 22, 2019
Technical Pulse: Singapore Telecommunications Ltd
Nov 22, 2019

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