First REIT

31/3/2017
Accumulate:

• Strong DPU growth - CAGR 14.5%
• Attractive dividend yield 6.6%
• Strong fundamentals - 100% occupancy, WALE 10-15 years, healthcare assets
• Strong growth story - pipeline, future aims, and AEIs

Metrics

• Last done (as of 31/3/2017): S$1.31
• AUM: S$1.273bil, CAGR 16.4%
• Debt: Gearing 31.1%, 70% debt maturing by 2018, 92.3% fixed, Cost of debt 3.67%-4.23%, SGD
• Occupancy: 100%, WALE 10-15 years, earliest rental renewal in 2021
• NAV: S$1.01, PNAV 1.267
• Dividend: 2016 DPU S$0.0847, Dividend yield ~6.6%, CAGR 14.5%
• NPI CAGR 16%

Operations

• Healthcare REIT
• 18 assets - Indonesia: 11 hospitals, 1 integrated hospital & mall, 1 integrated hotel & hospital and 1 hotel & country club • Singapore: 3 nursing homes • South Korea: 1 hospital
• Indonesia property rental forex volatility mitigated by pegging base rent to SGD
• South Korea property rental: USD
• Sponsor Lippo Karawaci - Right of First Refusal (have choice to accept or refuse before 3rd party candidates)

Investment thesis

• 43 hospitals in the pipeline
• Aim to scale-up to US$3.5 billion in 5 years
• 2 potential Asset Enhancement Initiatives (AEIs)
• Healthy gearing to make acquisitions

Risks

• Changes in interest rate environment affecting cost of debt
• Delay in pipeline
• Sponsor - uncertain plans to “shift their 2 REIT listings in Singapore to Indonesia”. The rationale for the move is to benefit from tax breaks offered by Jakarta. However analyst view it as unlikely

Tianjin Zhongxin Pharmaceutical Group

31/3/2017
Accumulate:

1. Attractive valuation PE ~12 for level of growth
2. Decent dividend yield ~3.5%
3. Established TCM business in China with strong products, coupled with Western Pharma exposure

Metrics

• Last done (as of 31/3/2017): S$0.99
• PE ~12, PB ~1.33
• Revenue CAGR ~10%, Earnings CAGR ~12%
• Total Debt to Equity 13.66%
• Dividend yield 3.5%, Dividend CAGR ~8%
• ROE 13.4%, ROA 7.9%

Operations

• Traditional China medicine focused manufacturer and developer - 60% TCM and 30% western pharmaceutical products through cooperation with foreign companies
• Owns 560 varieties of preparations in 17 types, 587 certificates of approval for preparations, and 9 certificates of approval for crude drugs. Among them, 4 Chinese medicines have been honored as National Treasure-like creations
• Products have also been exported to more than 30 countries
• R&D focused - The Company completed application of 38 invention patents, 9 utility model patents and 9 exterior design patents during the year and 11 invention patents were approved in the year 2015

Growth story

• No concrete growth strategy stated other than more medicinal innovation

Risks

• RMB depreciation - profits in RMB
• Products lose demand, competition etc.
• Western pharmaceutical segment affected by geopolitical factors 

800 Super

31/3/2017
Accumulate:

1. Attractive valuation PE 10.72 for level of growth and stable industry
2. Decent dividend yield ~2.9%
3. Some levels of regional expansion
4. New waste to energy plan to generate more revenue streams

Metrics

• Last done (as of 31/3/2017): S$1.205
• PE 10.72 (low for growth), PB 2.9
• Revenue CAGR ~12%, Earnings CAGR ~23%
• Total Debt to Equity 65%
• Dividend yield ~2.9% (decent), Dividend CAGR ~35%
• ROE 26.2%, ROA 12.7%

Operations

• Waste management (waste collection and recycling services), cleaning and conservancy and horticultural services
• Re-awarded a public waste collection contract for a period of 7 years and 9 months commencing from 1 January 2014 to provide waste collection services for the residential and trade premises in the Ang Mo Kio – Toa Payoh sector

Investment thesis

• Upon its targeted completion in 2017, the Waste to energy plant at the Tuas South leasehold land is expected to generate new revenue streams and cost savings for the Group
• Successfully expanded our business footprint regionally with the establishment of a plastic recycling subsidiary in Batam, Indonesia
• "Strategic direction towards downstream waste treatment will create growth opportunities for 800 Super in the long haul" - value chain processing of waste into final product

Risks

• Competition stealing business
• Failure to execute expansion plans, or lack of further expansion plans

Isoteam

29/3/2017
Accumulate:

• Attractive valuation PE 12.47 for high growth
• Favorable macro factors - Singapore government infrastructure initiatives
• Potential growth - expansion into Myanmar, Malaysia and other countries

Metrics

• Last done (as of 29/3/2017): S$0.40
• PE 12.47 (cheap for growth), PB 2.06
• Revenue CAGR ~21%, Earnings CAGR ~25%
• Total Debt to Equity 16.49%
• Dividend yield 1.9%, Dividend CAGR ~10%
• ROE 18.49%, 11.27%

Operations

• Building maintenance and estate upgrading - Repairs & Redecoration, Addition & Alteration, complementary niche specialist services, Eco-conscious solutions
• Industry leader with 19- year track record
• Growing order book

Growth story

• Singapore government initiatives - Ongoing rejuvenation of mature and middle aged estates
• 80% of buildings to be Green Marked by 2030
• Expanding into Myanmar (won 4 contracts in 2016) and Malaysia
• Expand R&R and A&A services into untapped sectors in Singapore - educational institutions, army camps, industrial
• Renewable energy - Grow renewable energy installation business in Singapore (Solar panels and hydrogen fuel cells)

Risks

• Projects lost, competition, failure to execute growth plans

Singapore Large Cap Stocks

Market cap > S$5 bil

1. Hong Kong Land USD
2. ComfortDelgro
3. CapitaLand
4. ThaiBev
5. ST Engineering
6. DBS
7. Keppel Corp

ISEC Healthcare

28/3/2017
Accumulate:

1. Relatively attractive valuation PE 22.5 with high growth
2. Growth story - acquisitions and sector growth
3. Attractive dividend yield 3.36% and growing

Metrics

• Last done (as of 28/3/2017): S$0.295
• PE 22.5, PB 2.51
• Revenue CAGR ~15%, Earnings CAGR ~28%
• Debt to Equity 0%
• Dividend yield 3.36%, Dividend CAGR ~110%
• ROE 11.42%, ROA 10.47%

Operations

• Specialist medical eye care services with 19 specialist doctors at 4 locations in Malaysia and Singapore
• In 2013 ISEC KL performed over 5,000 major surgeries and served more than 70,000 patients

Growth story

• ISEC has proposed the acquisition of JL Medical, a group of four GP and aesthetic clinics in Singapore. ISEC is expanding into complementary specialties. Valued at SGD13.9m or just 12x P/E, this will be an EPS-accretive deal
• ISEC has a global M&A pipeline, Indonesia, Taiwan, Vietnam, Cambodia and China
• Key sector drivers: ageing population, increasing awareness, rising income level, increase in private insurance coverage

Risks

• Acquisitions delay or do not materialize
• Further MYR depreciation against SGD

China Aviation Oil

28/3/2017
Buy - tp 2.00

1. Attractive valuation: PE 10.31
2. Strong growth story - aviation industry, China, potential acquisitions with cash
3. Competitive advantage - sole supplier in China and growing global presence

Metrics

• Last Done (as of 28/3/2017): S$1.50
• PE 10.31, PB 1.41
• Total Debt to Equity 15.39%
• Dividend yield ~2%, consistent through tough times and growing
• ROE 14.31%, ROA 8.12%

Operations

• Jet fuel supply and trading
• Largest physical jet fuel trader in the Asia Pacific region
• Sole supplier of imported jet fuel to the civil aviation industry of the People’s Republic of China (17 airports)
• Supply jet fuel to airline companies in Asia Pacific, North America, Europe and the Middle East (38 airports)

• International trading of jet fuel and other oil products
• Fuel oil, gas oil and aviation gas
• Acquisitions of oil related assets

Revenue: 51% China, Rest 49%

Growth story

• Competitive advantage in the Chinese civil aviation market
• China is set to be the world’s largest civil aviation market by the 2030s - CAAC
• China’s “One Belt, One Road” initiative
• Under China’s 13th Five-Year Plan, CAAC targets to have 260 airports in China
• Associate companies catering to other countries - leading global presence
• Growing cash hoard - ripe for acquisitions

Risks

• Macroeconomic uncertainties - Oversupply of oil, depressed oil prices, volatilities in financial markets and geopolitical uncertainties

Singapore Mid Cap Stocks

From 500mil to 5bil market cap:

1. Venture Corp
2. China Aviation
3. Sheng Siong
4. Haw Par
5. SATS
6. Singapore Post
7. YZJ Shipbuilding SGD

Viva Industrial Trust

27/3/2017
Accumulate:

1. Strong fundamentals - NPI CAGR, Steady dividend growth, strong occupancy
2. Attractive dividend yield 8.9%
3. Limited supply of new business parks - Positive rental reversions expectations
4. Strong diversified tenants

Metrics

Last Done (as of 27/3/2017): S$0.785

AUM: S$1.25 billion - smaller so cost of debt higher

Debt: Gearing 39.4% (a bit high), WADM 3.2 years (ok), 89.9% fixed, Cost of debt 4% (high), SGD

Occupancy: 89.8% (not bad), WALE 3.1 years (average)

NAV: S$0.791, PNAV 0.99 (a bit high)

Dividend: 2016 DPU S$0.07002, Dividend yield 8.9% (high), CAGR ~1.7%

NPI: CAGR ~44%

Operations

Industrial REIT - 9 properties in Singapore

2 Integrated Business Parks, 3 Warehouses and 4 Light Industrial Factories

Diversified trade sectors

Total of 143 tenants, of which 42.5% of tenants are in information technology, e-business
or data centre operations
65.9% of tenants are multinational corporations or government-linked corporations

Growth story

Limited Supply of New Business Parks
Completion of yield accretive acquisition of 6 Chin Bee Avenue taps on the strong potential of Singapore’s growing and recession-resilient food services sector
Build pipeline of yield accretive acquisitions in Singapore and overseas
Asset enhancements

Risks

Limited debt headroom - Gearing 39.4%

Expiry of rental support at UE Bizhub East - Dividend yield may only be 8.4%

Non-renewal of tenants

CapitaLand Retail China Trust

27/3/2017
Accumulate:

1. Cheap valuation - PNAV 0.87, Dividend yield 7%
2. Strong fundamentals - Occupancy, Gearing, NPI
3. China economic growth

Metrics

Last Done (as of 27/3/2017): S$1.435
AUM: S$2.54 billion
Debt: Gearing 35.3%, WADM 1.84 years, 87.5% fixed, Cost of debt 2.81%, 93.9% SGD
Occupancy: 95.9%, WALE 5 years
NAV: S$1.65, PNAV 0.87
Dividend: 2016 DPU S$0.1005, Dividend yield 7%, CAGR ~1%
NPI: CAGR ~7%
DRP offered

Operations

Retail REIT: 11 Shopping malls
China, Hong Kong and Macau

Growth story

FY 2016 China GDP grew 6.7%* y-o-y
Chinese Academy of Social Sciences expected FY 2017 GDP at 6.5%
FY 2016 urban disposable income and expenditure increased 5.6%* and 5.7%* y-o-y respectively
Continue to seek acquisition opportunities to strengthen CRCT’s portfolio

Risks

SGDRMB - Strengthening of SGD will affect DPU received in RMB
Change in property tax basis for Beijing malls increased tax expenses

Lippo Malls Indonesia Retail Trust

26/3/2017
Accumulate:

1. Strong fundamentals - price a bit high but justified by DPU CAGR 2% qoq
2. Favorable Indonesian economy
3. Attractive dividend yield - 8.6%
4. Potential future acquisitions - low debt

Metrics

Last Done (as of 26/3/2017): S$0.395
AUM: S$1,949.4 million
Debt: Gearing 31.5%, WADM 2.59 years, 19.2% expiring in 2017, 70% fixed, Cost of debt 4-7%, SGD
Occupancy: 94.3%, WALE 4.51 years, 23% of leases expiring in 2017
NAV: S$0.39, PNAV 1.01
Dividend: 2016 DPU: S$0.0341, Dividend yield: 8.6%, CAGR 2% qoq
NPI: CAGR 7.68%

Operations

20 retail malls and 7 retail spaces across Indonesia
Diversified trade mix
Top 10 tenants contribute approximately 22% of Portfolio’s Gross Rental Income
Top tenant 9.5% of gross rental income

Growth story

Favorable Indonesian economy, tax amnesty could increase money flow into economy
Low debt allows for acquisitions
IDR/SGD might have bottomed

Risks

IDR/SGD could decline more
Income support from acquisition of Kemang Mall. Yield would only be 7% without income support
Short land leases - land leases that average 17 years

Singapore Small Cap Stocks

Up to 500mil market cap

1. Colex
2. CEI
3. CNMC Goldmine
4. Amara
5. ISEC Healthcare
6. Fischer Tech
7. China Sunsine
8. Micro-Mechanics
9. Nordic 
10. Duty Free International
11. Cogent
12. 800 Super
13. Isoteam
14. Dutech
15. Sinostar PEC