SINGAPORE - Stay up to date on market chatter with our picks of the latest broker research reports, compiled by The Straits Times Money Desk.
1. Venture Corp
Broker: Maybank Kim Eng
Venture's Q1 results showed the best signs yet of a return to growth with year-on-year revenue growth at its best since FY2007, while net profit registered its third consecutive quarter of year-on-year improvement.
This reinforces our view that Venture is on track for a 12 per cent yearly earnings per share growth in FY2014 after four years of earnings decline. We think the stock is undervalued and the earnings recovery story remains underappreciated.
Already, Venture has delivered five consecutive quarters of year-on-year revenue growth, accompanied by three quarters of year-on-year net profit growth. We expect the momentum to strengthen beyond FY2014. We are also encouraged by the fact that its customers are seeing improved business visibility. We see additional earnings kicker from new customers, particularly in the life sciences arena.
Reiterate Buy with target price of $8.64.
2. GuocoLeisure (GLL)
GuocoLeisure's stock has seen a pick-up in trading interest recently, on speculation of potential privatisation amid a spate of mergers and acquisitions in the real estate and hotel sectors locally. The company has since clarified that it has no plans of delisting from the Singapore Exchange.
We continue to like GLL as the company makes the transition towards a brand-driven, global hospitality company. GLL is currently embarking on a hotel-operator model that will see it expanding to 100 major cities by 2023, from its current UK-based portfolio. This will be primarily driven by the creation of strong brands and the expansion of third-party hotel management contracts.
GLL's hotel division CEO, Michael DeNoma, has an impressive record for value-creation in his previous appointments as CEO of Chinatrust Commercial Bank and Standard Chartered Bank Global Consumer Bank, and we are positive on his execution capability.
GLL is currently retrofitting its flagship London hotels and against a backdrop of strengthening macro-economic conditions and the outperformance of the London hospitality market, it expects the rate gains from refurbished rooms returning to inventory to help mitigate the impact of rooms unavailable due to refurbishment.
Potential divestment of non-core assets such its Molokai property or Bass Straits Royalty, and interest savings on refinancing of high-cost debentures are other catalysts for the stock. We maintain our Buy rating on the stock and target price of $1.43.
Over the weekend, CapitaLand announced that, together with concert parties, it has by 5pm on June 6 owned, controlled or have agreed to acquire (including acceptances) about 97.1 per cent of CapitaMalls Asia's (CMA) issued share capital.
Therefore, its stake in CMA is now above the threshold to compulsorily acquire the remaining shares that it does not own. The offer for CMA shares will close at 5:30pm on June 9 and CMA will be suspended from trading on June 10.
We continue to see CapitaLand move to delist CMA as a rational one that will simplify the group's organisational structure and allow management to deploy significant capital to well-understood CMA assets. More significantly, the privatisation of CMA will also be accretive to CapitaLand's earnings and return on equity, which is now a key focus for management.
Maintain Buy on CapitaLand with an unchanged fair value estimate of $3.79.