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TopicsMapletree Industrial Trust
Raffles Medical Group
Sheng Siong Group
CapitaLand Retail China Trust
OCBC
UOB
Sembcorp Marine Ltd
Apple Inc
Western Digital Corp
31 Oct 16, 8.15am/11.15am Morning Call/Webinar
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Disclaimer
The information contained in this presentation has been obtained from public sources which Phillip Securities Pte Ltd (“PSPL”) has no reason to
believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in this
presentation are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or
warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any
such information or Research contained in this presentation is subject to change, and PSPL shall not have any responsibility to maintain the
information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be
liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made
available, even if it has been advised of the possibility of such damages.
This presentation is intended for general circulation only and does not take into account the specific investment objectives, financial situation or
particular needs of any particular person.
You should seek advice from a financial adviser regarding the suitability of the investment product, taking into account your specific investment
objectives, financial situation or particular needs, before making a commitment to invest in such products.
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Mapletree Industrial Trust
Momentum in Hi-Tech Buildings segment
Richard Leow
Phillip Securities Research Pte Ltd
31 October 2016
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4
Occupancy remains healthy, but dips marginally; average passing rent
maintained
93.0%→92.5%, S$1.92 psf/month
Rental reversions among 4 segments ranged between -2.3% to +2.7%
Portfolio weighted average: +0.7%
Maintaining our cautious stance over FY18 lease expiry profile
WALE 2.8 yrs
6.8% expiring in 2HFY17 "business as usual"
32.8% by NLA expiring in FY18 and is a concern to us
Mapletree Industrial Trust(Neutral, TP:S$1.74, FY17e DPU: 11.14 cents (6.5%), Last:S$1.725)Results at a glance
(SGD mn) 2Q17 2Q16 yoy (%) Comments
Gross revenue 84.21 82.74 1.8 Higher rental rates across all property segments, higher occupancies in Hi-Tech
Buildings
Net property income 63.63 61.03 4.3 Lower property maintenance expenses , uti l i ties and property taxes ; offset
by higher marketing commiss ion
Distributable income 50.59 48.91 3.4 Higher manager's management fees and borrowing costs
DPU (Cents) 2.83 2.79 1.4 1.8% larger Unitholder base
Source: Company, Phi l l ip Securi ties Research (Singapore)
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5
Organic growth strategies of BTS and AEI projects are on track
Phase One of HP BTS obtained TOP in October
Rental contribution commence 1 December
Phase Two complete six months later
Construction for Kallang Basin 4 AEI commenced in August
Target completion in 1Q 2018
0% pre-committed, better visibility six months prior to completion
Strong balance sheet favourable for inorganic growth
Lower gearing: 29.0%
Firepower to make acquisitions
Mapletree Industrial Trust(Neutral, TP:S$1.74, FY17e DPU: 11.14 cents (6.5%), Last:S$1.725)
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents.
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Raffles Medical Group
New medical centres gaining traction;
MCH continues to lag
Soh Lin Sin
Phillip Securities Research Pte Ltd
31 October 2016
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7
MCH continues to drive topline: ex-MCH, Revenue +7.9% yoy
Staff costs compressed operating margin: 18.2% in 3Q15 vs 15.6% in 3Q16
↑Staff cost % revenue: with MCH 51.5%; ex-MCH 50.1% (still above 50%)
Cost rationalisation in MCH could take some time, and continues to recruit
to cater for the expanding business operations
New medical centres gaining traction; MCH yet to b/even
RafflesHospital Extension (2017) and the Shanghai New Bund International
Hospital (2018) to support growth, domestically and regionally
Raffles Medical Group(▲Accumulate, ◄►TP:$1.62, Last:$1.51)
SGD mn 3Q16 3Q15 y-y(%) Comments
Revenue 119.3 101.5 17.5 Growth in both Healthcare Services (+39.7%) and
Hospital Services (+6.0%)
EBITDA 22.3 21.7 2.7 Higher staff costs
Operating profits 18.6 18.5 0.3 Higher depreciation expenses
PBT 18.8 18.8 0.2
Net income, reported 16.2 15.6 4.0
Net income, adj. 16.2 15.6 4.0
Source: Company, Phillip Securities Research (Singapore)
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Sheng Siong Group
Steady margin despite consumer sentiment
Soh Lin Sin
Phillip Securities Research Pte Ltd
31 October 2016
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9
Cautious consumer sentiment could extend into FY17, dampening sales
New stores growth lower than expectation; SSSG resumed its
contractionary trend in 3Q16, 2Q16 is the only positive quarter for SSSG
Management seeking new stores to mitigate closure of two major stores in
FY17; Seven new supermarkets units will be up for bidding
Stores at Woodlands Blk 6A and the Verge contribute c.10% of revenue
Successful bidding of new stores would be a catalyst for re-rating.
Steady gross margin at ~25% and extend into FY17F
Favourable drivers for high margin to persist
Catalyst for higher margin will be an improvement of product mix
Sheng Siong Group(◄►Accumulate, ▲TP:$1.13 (prev. $1.10), Last:$1.04)
(SGD mn) 3Q16 3Q15 y-y (%) Comments
Revenue 202.4 200.0 1.2% New stores +5.3%, SSSG -1.15%, temporary closure of
Loyang store -2.95%
Gross profit 52.5 48.7 7.8% Higher margin on lower input prices
EBITDA 21.1 18.8 12.2%
Net profit 15.7 14.5 8.2%
Source: Company, Phillip Securities Research Pte Ltd estimates
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Table 1: Changes in Retail Space/ Business Area
Location Targeted / Effective
Date Total Gross Floor
Area Remarks
A. One New Store in 3Q16
1. Yishun Junction 9 September 16 15,500 sqft Total store count of 42 stores as at 30 September 2016, or +3.5% quarter-on-quarter (“qoq”) in retail area, after taking into account of the store at Loyang Point which was temporarily closed on 15 April 2016.
B. Maiden Store Outside Singapore
2. Basement of a shopping mall in Kunming, China
2Q17 54,400 sqft Completion of construction of the mall has been delayed. SSG has not been able to obtain a firm handover date from the landlord. The expected date of commencement may be further postponed to the second quarter of 2017, missing the 2017 Chinese New Year sales. Nonetheless, Management envisaged the China store to breakeven within two years of operation.
C. Interim Closure for A&E and to be Re-opened with Larger Retail Area
3. Loyang Point
15 Apr 2016 (closed) 1Q17 (re-open)
6,000 sqft (Old) 8,000 sqft (New)
Closed for renovation work by HDB and will be re-located to another new unit in the building with additional 2,000 sqft
May be able to open in early 2017 to capture Chinese New Year sales.
4. Second floor @ Blk 506 Tampines Central
Mar 2017 (close) May 2017 (re-open)
9,800 sqft (Old) 25,000 sqft (New)
Closed for A&E works to the building.
Previously target to close in 4Q16 and to re-open in Jan 2017. Delay to avoid closure during Chinese New Year period.
D. Close
5. Woodlands Blk 6A June 2017 (close) 41,500 sqft HDB redeveloping the area.
Key store contributing between 5% and 10% to total revenue.
6. The Verge 2017 45,036 sqft Pending finalisation of acquisition deal by Lum Chang Holding.
Nonetheless, lease slated to expire by March 2017.
E. Other
7. Land adjacent to central warehouse
To be completed by end of 2017
1,800 sqm Construction costs is estimated to be c.S$15mn and expected to spread over FY17-18F.
Source: Company, PSR
10
Sheng Siong Group(◄►Accumulate, ▲TP:$1.13 (prev. $1.10), Last:$1.04)
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CapitaLand Retail China Trust
Weaker RMB and higher property tax provisions for Beijing
properties dented earnings amidst stable mall operations
Tan Dehong
Phillip Securities Research Pte Ltd
31 October 2016
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12
New taxes hit earnings, Otherwise mall operations largely stable
New Property Tax provisions and Value-Added Tax (VAT) impacted earnings.
Portfolio occupancy stable at 95.2% from FY15 (95.1%)
New acquisition Galleria to boost portfolio earnings from 1 Oct 2016.
CapitaLand Retail China Trust(Accumulate, TP:$1.62, FY16e DPU:10.1 cents (6.7%), Last:S$1.51)
Results at a glance
(SGD mn) 3QFY16 3QFY15 y/y (%) Comments
Gross Revenue 50.6 55.3 -8.5%
Net property income 32.8 35.2 -6.9%
Distributable income 20.6 22.3 -7.6%
DPU (Cents) 2.36 2.64 -10.6% Increased number of issued units
Source: Company, Phillip Securities Research (Singapore)
Weaker RMB against SGD. Gross Revenue declined 1.2% in RMB terms,
owing to new 5% VAT implemented from 1 May 2016, which would be offset
from revenue.
Mainly due to VAT, higher property tax provisions and weaker RMB against
SGD. Gained 0.6% in RMB terms.
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13
Light at the end of the tunnel for CapitaMall Minzhongleyuan
New subway line to open 28 December 2016. Mall occupancy gradually
recovering to 80.1% from 70% last quarter
Portfolio tenant sales stabilizing at low single digits growth
Tenant Sales yoy growth (Q1:1%, Q2: 1.2%, Q3: 1.8%)
Remain confident of manager’s ability to attract quality tenants
Ability to attract quality tenants to improve tenant sales and mall rental
Source: Company, Phillip Securities Research (Singapore)
New Chengdu acquisition to boost earnings from October 2016
CapitaLand Retail China Trust(Accumulate, TP:$1.62, FY16e DPU:10.1 cents (6.7%), Last:S$1.51)
2016 New Tenants Mall
Sales Growth over
previous tenant
Binkeke (滨可可) CapitaMall Qibao >70%
Xiao Niu Niu (小牛牛) CapitaMall Xizhimen >100%
PANDORA and BOY LONDON CapitaMall Wangjing >100%
UNIQLO CapitaMall Grand Canyon >95%
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14
China Retail Sales
CapitaLand Retail China Trust(Accumulate, TP:$1.62, FY16e DPU:10.1 cents (6.7%), Last:S$1.51)
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15
Name Mkt Cap (SGD mn) Price Dvd Yld Av. Cost of Debt P/B Gearing (%)
CAPITALAND RETAIL CHINA TRUST 1,330 1.56 6.58 2.90% 1.00 36.70
MAPLETREE GREATER CHINA COMM 2,965 1.08 6.88 2.87% 0.91 39.36
BHG RETAIL REIT 338 0.60 6.10 N.A 0.74 29.50
Source: Bloomberg, Phillip Securities Research (Singapore)
5
5.5
6
6.5
7
7.5
8
Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
Dividend Yield
DIVIDEND_YIELD Average +1S.D. -1S.D
Source: Bloomberg, Phillip Securities Research (Singapore)
0.4
0.6
0.8
1
1.2
1.4
1.6
Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
Price/NAV
PX_TO_BOOK_RATIO Average +1S.D. -1S.D +2S.D. +2S.D.
Source: Bloomberg, Phillip Securities Research (Singapore)
CapitaLand Retail China Trust(Accumulate, TP:$1.62, FY16e DPU:10.1 cents (6.7%), Last:S$1.51)
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Oversea-Chinese Banking Corp
Performance boosted by Non-interest Income
Jeremy Teong
Phillip Securities Research Pte Ltd
31 October 2016
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17
Net Interest Income dragged unfavourable volume and rate dynamics q-o-q
Int. earning assets remain flat. Avg. Rates on interest earning assets fell 9bps. Avg. Rates on interest
bearing liabilities fell 3bps.
Strong Wealth Management and Credit Card performance
Ability to respond and offer thematic products to suit the need (eg. Yield play), OCBC 365 promotions
Life Assurance profit boost
Non-participating fund profit of S$83.9mn (3Q15: -S$5.7mn, 2Q16: S$27.1mn)
Gains from sale of properties
S$51mn gain (3Q15: S$15mn, 2Q16: S$7mn)
Oversea-Chinese Banking Corp(Maintain Neutral. Higher TP:S$8.25, previously S$8.14. Last:S$8.50)
Results at a glance
(SGD mn) 3Q16 3Q15 y-o-y (%) 2Q16 q-o-q (%) Comments
Net interest income 1,234 1,317 -6% 1,260 -2% NIMs -4bps y-o-y. Loans -1.9% y-o-y
Fees & Comm 428 408 5% 417 3% Higher Credit Cards and WM income
Insurance 199 98 103% 146 36% Higher profi t from l i fe assurance
Other NII 343 269 28% 225 52% Boosted by gains from sale of properties
Total Reveue 2,204 2,092 5% 2,048 8%
Expenses -953 -900 6% -932 2%
PATMI 943 902 5% 885 7%
Source: Company, PSR
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United Overseas Bank Limited
Posturing for more returns from higher risks
Jeremy Teong
Phillip Securities Research Pte Ltd
31 October 2016
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19
Net interest income stable
Avg. Rates on interest earning assets fell 3bps. Avg. Rates on interest bearing liabilities fell 5bps.
Supported by 2.4% q-o-q customer loan growth, offset by lower interest rates on customer loans
Better yield on interbank balances which helped improve overall interest earning efficiency
Non-interest income lower y-o-y
one-off gains from sale of investment securities in 3Q15 offset by higher trading income from
customer FX trading activities
Higher risk taking
NPA secured mainly by shipping vessels had increased 12.8% q-o-q to S$804mn
Even larger jump in NPAs was registered for unsecured loans, up 27.9% q-o-q to S$1.606bn
United Overseas Bank Limited(Maintain Neutral. Lower TP:S$17.63, previously S$17.95. Last:S$18.63)
Results at a glance
(SGD mn) 3Q16 3Q15 y-o-y (%) 2Q16 q-o-q (%) Comments
NII 1,230 1,235 0% 1,211 2% Higher loans growth y-o-y, Lower NIM y-o-y
Fees & Comm 492 486 1% 475 4% Higher Fund Mgmt fees
Other Non Int Income 318 366 -13% 338 -6%Lower Net Gain from Inv Securi ties . Higher Net
Trading Income
Total Revenue 2,040 2,087 -2% 2,024 1%
Expenses 919 904 2% 927 -1%
Net Profit 791 858 -8% 801 -1%
Source: Company, PSR
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Sembcorp Marine Ltd
Shrinking order book weakens profitability
Chen Guangzhi
Phillip Securities Research Pte Ltd
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21
Results at a glance
Net order book drying up without new businesses
New contracts secured: S$320mn in 9M16 vs S$2.9bn in 9M15
Order backlog: S$8.3bn YTD (S$3.1bn from Sete Brasil contracts)
Core business performance (9M16)
Rig building: S$740mn (9M15:S$.1.8bn) Floater: S$651 (9M15: S$604mn)
Offshore platform: S$916 (9M15:S$722mn) Repairs: S$350mn (9M15: S$397mn)
Cost cutting and debt reduction
Manpower cut: 8,000 since 2015
Net gearing: 1.03x from 1.1x in 1H16
Sembcorp Marine Ltd(Sell, ▼TP:S$0.87 (prev. S$1.14), Last:S$1.28)
(SGD mn) 9M16 9M15 y-y (%) Comments
Revenue 2,714.9 3,641.1 (25.4) Due mainly to the low revenue recognition from rig building
segment, resulting from delivery deferment and lower
repair business
Gross profit 258.0 458.9 (43.8) Due mainly to lower contribution from rig building projects,
which have higher margins than other projects
Operating proft 158.2 360.0 (56.1) The increasing FX losses due to revaluation of assets and
liabilities denominated in GBP and USD were partially relieved
by gains from hedging instruments
Net profit 44.5 253.6 (82.4) Due mainly to higher interest burden, resulting from the
increase in borrowings
Source: Company , Phillip Securities Research (Singapore)
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Apple Inc
Apple ripens, still room to grow
Ho Kang Wei
Phillip Securities Research Pte Ltd
31 October 2016
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23
• Revenue down 9% yoy and Net Income down 18.97% yoy
• iPhones sold less but at higher ASPs
• China down, EM up
• 1 week of iPhone 7 sales
• Service revenue grew by 24% yoy
• App Store growing by 43%, other services up double digit
• Apple Pay transaction up 500% yoy
• Strong guidance for next quarter
• Guided USD 76-78bn
• Highest quarter ever
• Strong iPhone 7 demand and new Macbook
Apple Inc(Accumulate, TP: US$125.81, previous: US$114.74, Last close: US$114.48)
Y/E Sep, USD bn 4QFY16 3QFY16 4QFY15 qoq yoy
Revenue 46.9 42.4 51.5 10.6% -9.0%
Services Rev 6.3 6.0 5.1 5.8% 24.4%
Other Products Rev 2.4 2.2 3.0 6.9% -22.1%
iPhone Rev 28.2 24.0 32.2 17.1% -12.6%
iPad Rev 4.3 4.9 4.3 -12.7% -0.5%
Mac Rev 5.7 5.2 6.9 9.5% -16.6%
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Western Digital Corp
Stronger HDD demand drives revenue
Ho Kang Wei
Phillip Securities Research Pte Ltd
31 October 2016
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25
• Revenue outperformed expectations
• Synergies on track, operating exp lower than expected
• Interest Cost savings to boost bottom line
• Debt was restructured, expects USD 270 mn in annual cost savings
• If achieved, represents more than 20% reduction in estimated interest
payments
• Strong Cloud and Enterprise storage demand
• Total Exabyte shipped increased 23.5% yoy, Data Center EB shipped grew
40% yoy
• Cloud demand grew nearly 50%
• PC market stabilized, grew 14%
Western Digital Corp(BUY, TP: US$71.54, previous: US$62.88, Last close: US$59.98)
Y/E Jun, USD bn, EPS(US$) 1QFY17 1QFY16 yoy Comments
Revenue 4.71 3.36 40.3%
SanDisk plus stronger HDD demand helped
pull Revenue up
Gross Profit 1.34 0.96 39.8%
Net Income 0.45 0.41 8.7%
Non-Gaap results show better than
expected earnings once acquisition cost
removed
Gross Margin 33.9% 29.1% 4.8%
Higher Margins achieved due to higher
level of SSD in the product mix
EPS 1.54 1.76 -12.5%
While down yoy, EPS of 1.54 is a reversal of
previous quarters' trend of falling EPS
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26
Disclaimer
The information contained in this presentation has been obtained from public sources which Phillip Securities Pte Ltd (“PSPL”) has no reason to
believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in this
presentation are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or
warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any
such information or Research contained in this presentation is subject to change, and PSPL shall not have any responsibility to maintain the
information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be
liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made
available, even if it has been advised of the possibility of such damages.
This presentation is intended for general circulation only and does not take into account the specific investment objectives, financial situation or
particular needs of any particular person.
You should seek advice from a financial adviser regarding the suitability of the investment product, taking into account your specific investment
objectives, financial situation or particular needs, before making a commitment to invest in such products.
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27
Analysts Pei Sai Teng, Macro
Jeremy Ng, Technical Analysis
Jeremy Teong, Banking & Finance
Soh Lin Sin, Consumer | Healthcare
Richard Leow, Transport | REITs (Industrial)
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