Brokers' Call

SINGAPORE POST

Broker: CIMB

Call: Buy

Target price: $2.07

The formal announcement of a joint venture between Singapore Post (SingPost) and Alibaba has removed the biggest overhang on the stock.

Alibaba will pay $91.7 million for a 34 per cent stake in Quantium Solutions, a wholly owned unit of SingPost, which will retain a 66 per cent stake.

SingPost also plans to issue 107.6 million new ordinary shares at $1.74 each to Alibaba, which will raise Alibaba's stake in SingPost from 10.23 per cent to 14.51 per cent.

Part of the $183.6 million in net proceeds will be used for expansion in e-commerce logistics.

The terminal growth rate is raised from 1 per cent to 1.5 per cent. Catalysts could include M&As and volume growth from the joint venture.


GENTING SINGAPORE

Broker: OCBC Investment Research

Call: Hold

Target price: $0.95

The counter is languishing at around $0.90, probably weighed down by a lacklustre VIP business outlook for the medium term and a recent outbreak of the Middle East respiratory syndrome (Mers) in the region.

Genting has already warned that VIP volumes are likely to remain sluggish in the medium term, as Chinese high-rollers are still affected by the anti-graft campaign in their country.

Mers could affect air travel and visitor numbers at Resorts World Sentosa and Universal Studios Singapore. However, international tourist arrivals have remained fairly stable. As more people avoid South Korea because of the Mers outbreak there, some could find their way to Singapore.

Genting is really a 2017 story, and one with a strong overseas angle. It will be opening an integrated resort on Jeju Island in South Korea. Another development to watch will be whether Japan gives the go-ahead for casinos.

A version of this article appeared in the print edition of The Straits Times on July 13, 2015, with the headline 'Brokers'Call'. Print Edition | Subscribe