Brokers' Call

GLOBAL LOGISTIC PROPERTIES

Broker: OCBC Investment Research

Call: Hold

Target Price: $2.87

GLP's fourth-quarter profit after tax and minority interest for financial year 2017 increased 62 per cent year on year to US$247.1 million (S$343.5 million), mainly due to higher asset values as portfolio cap rates compressed over the quarter in Japan, the United States and Brazil.

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But on a core basis, after adjusting for non-recurring items, fourth-quarter earnings fell 5 per cent year on year, mainly due to lower contributions from the group's second US portfolio after its syndication in the second quarter.

In terms of the topline, fourth-quarter revenues increased 14 per cent to $226.9 million due to rent growth and lease-up after the completion and stabilisation of Chinese development projects, financial services income from China and higher fund management fee income.

GLP reports that it remains in discussion with several shortlisted parties for its strategic review, following its evaluation of non-binding proposals received, and the due diligence process is ongoing.


CHINA EVERBRIGHT WATER

Broker: DBS Group Research

Call: Buy

Target Price: 64 cents

China Everbright Water (CEW) registered 18 per cent and 11 per cent growth in the first quarter of financial year 2017 in revenue and net profit respectively. First-quarter net profit accounted for approximately 24 per cent of full-year estimates. Earnings projections remain unchanged.

Top-line growth was mainly driven by an increase in construction revenue (up more than 30 per cent year on year) with its contribution to total revenue rising from 52 per cent in the first quarter of 2016 to 58 per cent in the corresponding quarter in 2017. This was due to the construction of the sponge city in Zhenjiang and the Fuhe River Basin restoration project.

Thanks to the settlement of a US dollar-denominated loan, no further forex loss was recognised in 2017's first quarter, which also lowered operating expenses. Nevertheless, the positive impact was partly offset by higher finance costs. Going forward, CEW's growth momentum is expected to continue.


SINGAPORE AIRLINES

Broker: OCBC Investment Research

Call: Hold

Target Price: $10.36

Singapore Airlines swung to a core net loss of $6.4 million in the fourth quarter of financial year 2017 versus core profit after tax and minority interest of $127.3 million a year ago, as it recorded a one-off provision of $131.9 million in relation to competition-related fines.

Fourth-quarter revenue was flat year on year at $3.72 billion despite traffic growth, as yields remained under intense pressure. Operating expenses grew 3.5 per cent year on year to $3.69 billion due to higher-than-average fuel prices, as well as the double-digit capacity expansion by Budget Aviation Holdings (that is, Tigerair and Scoot) and SilkAir.

For financial year 2017, revenue fell 2.4 per cent to $14.9 million with weaker performances in passenger airlines and cargo airlines.

A version of this article appeared in the print edition of The Straits Times on May 22, 2017, with the headline 'Brokers' Call'. Print Edition | Subscribe