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. Keppel Corporation
Third quarter 2014 net profit was in line with our, and consensus, expectations. The number for the first nine months of 2014 formed 73 per cent of our 2014 financial year forecast.
We up our margins for FY15-16 to 15.7 per cent from 15 per cent, in view of Keppel's persistent outperformance vs. guided margins of 10-12 per cent. Keppel reiterated that there is no change in order enquiries but we take a more conservative view for 2015-16, lowering our target to $5billion per annum from $6 billion, on slower rig momentum.
Hence, our earnings per share is cut by 1-4 per cent for FY15-16. We also reduce our target price due to lower orders.
Maintain ADD with lower target price of S11.30.
SingTel's share price has fallen some 7 per cent to hit a recent low of $3.64 since we downgraded our call to Hold on 14 Aug. This is in line with the lower overall market as well as the persistent slide in the Australian dollar against the Sing dollar (50 per cent of SingTel's revenue is from Optus).
But we note that the share price has fallen close to our comfort level of $3.60, which in our view, should have captured most of the negativity surrounding the Australian dollar lide. While we are paring down our AUD/SGD assumption slightly, which reduces by a little our 2015 financial year estimates, our fair value remains unchanged due to the higher market value of its listed associates.
Upgrade to BUY with fair value unchanged at $4.08
3. Singapore Exchange
SGX's results for the first quarter of its 2015 financial year met our, and consensus, expectations. Market conditions were challenging for securities market with averae daily volume down 27 per cent year-on-year amid a low volatility environment, but we expect an improvement.
On the flipside, the derivatives market had a good start with revenue contribution (32 per cent of operating revenue), overtaking the securities market (29 per cent).
Maintain NEUTRAL with a target price of $7.40