Food Empire Holdings | Buy

Target price: $1.00

Jan 17 close: $0.69

Broker: RHB, Jan 16

Caffe Bene is Food Empire's 22 per cent-owned associate. It has been undergoing financial difficulties due to excessive debts assumed prior to the group's investment.

We note that Caffe Bene recently filed for a court-led corporate rehabilitation process and is currently awaiting its approval. Based on our estimate, the group has an exposure of about US$10 million (S$13.2 million) to Caffe Bene, representing 4 per cent of its market capitalisation. We think this is the maximum impairment if Food Empire writes off its entire equity stake in the coffee house chain and shareholders' loans.

Maintain "buy", with an unchanged target price of $1. Food Empire remains our top pick for Singapore's consumer sector this year.

ESR-Reit | Buy

Target price: $0.63

Jan 18 close: $0.58

Broker: DBS Group Research, Jan 18

We are optimistic that investors will over time appreciate the Reit's strategy to reconstitute its portfolio, which would enhance returns. While fourth-quarter results for 2017 were weak, we believe that earnings have bottomed.

The trust manager has been acquired by a new sponsor, e-Shang Redwood, with an 80 per cent indirect interest. Given the sponsor's large portfolio and leading position in North Asia, exciting synergies could be created with the Reit.

Soilbuild Reit | Hold

Target price: $0.68

Jan 18 close: $0.70

Broker: OCBC Investment Research, Jan 18

When we published our last report, we noted Soilbuild Reit had $2.7 million in receivables. Since then, it has entered into an option agreement to divest the KTL Offshore property for $55 million in cash.

We believe the divestment will help Soilbuild Reit to better allocate capital and minimise its exposure to credit risk from KTL Offshore.

After incorporating 2017 financial figures, our fair value increases from $0.66 to $0.68. Maintain "hold".