In our inaugural Phillip Absolute 10 Model portfolio, it was up 4.9% in January. It outperformed the STI by 1% point this month. Top 3 movers in January18 were Banyan Tree, CapitaLand, and Micro-Mechanics. Bottom 3 movers in January18 were Geo Energy, AsianPayTV, and Ascendas REIT.

Below are some quick updates on some of the portfolio of companies.

Asian PayTV: Our Accumulate recommendation is based on the attractive and stable dividends from the recurrent and monopolistic pay TV subscribers. Chunghwa Telecom reported strong 20% growth in IPTV subscribers. Will be looking if there is any impact to APTV subscriber base when the company reports results on 26February.

Chip Eng Seng: CES remains our pick on present recovery in the Singapore residential market. All eyes will be on the take-up rates on upcoming launches across the island. CDL’s New Futura launch saw healthy take-up rates with c.39 units (out of 124) sold in the first two weeks. We will monitor the next big project launch, The Tapestry by CDL (c.820 units) in Tampines in March. Two weeks ago, CES also won an S$168mn contract from HDB, further bolstering their income from the construction arm, which is enough to sustain the 4c dividend. Dividend yield is attractive now at 4% with potential capital appreciation.

Dairy Farm: We expect Dairy Farm to benefit on its store expansion and robust economic backdrop in China, Hong Kong, and Singapore. Its post-store rationalization exercise and realization of its various margin enhancement initiatives could lift its profitability in FY17/18e. In addition, the impressive growth from its fast-growing associates, i.e. Yonghui and Maxim’s, will further boost its earnings.

Geo Energy: Coal prices continue to be on an uptrend. Indonesia coal price reference (HBA) is at US$95.5/tonne, a 1.6% MoM rise. China is encountering a shortage of coal supply and gencos demand the authority to increase coal imports. In Dec-17, Geo secured a new offtake agreement to provide 7.5mn tonnes of coal in FY18. Geo is expected to register organic growth in production with the commencement of TBR mine in 1Q18.

Micro-Mechanics: We downgraded to Accumulate on 30Jan17 due to price performance and revenue was softer than expected. We maintained our target price. We still find the investment merits of Micro-Mechanics attractive: ROE of >30%, ~60% GP margins, net cash $22mn balance sheet and ~4% dividend yield.

Banyan Tree: Recent share price weakness in February was likely compounded by the state of emergency declared in Maldives due to the political turmoil (2nd biggest market for BTH for Group-owned hotels, c.23% of FY16 revenue). Bigger picture for RevPAR recovery in Maldives in FY18 remains intact with hotel supply tapering off after 2018. Short-term drivers are continued momentum in Thai tourism, and mid-longer term catalysts are management contracts from partnerships with Accor and Vanke.