ComfortDelGro Corp | Buy
Oct 11 close: $2.14
Target price: $2.59
Broker: UOB Kay Hian, Oct 11
Management's remarks tie in with our view that ComfortDelGro's taxi business is on the mend.
The share price appears to be priced for perfection for 2018; positives from this year have already been reflected.
Upside will stem from earnings growth next year, arising from recognition of earnings from acquisitions made this year. Given the dynamics, a mini-sell-off could be triggered if results miss expectations.
Maintain "buy" and target price of $2.59. Dividend yield remains attractive at about 4.7 per cent, and its defensive nature will provide share price support.
NetLink NBN Trust | Buy
Oct 11 close: 77.5 cents
Fair value: 90 cents
Broker: OCBC Investment Research, Oct 11
TPG Telecom's entry, while a headwind to varying degrees for the incumbents, is actually positive for NetLink NBN Trust.
TPG would need to tap NetLink NBN's fibre network infrastructure to connect a substantial portion of its base stations, potentially contributing to NetLink NBN's non-residential and non-building address point revenue.
With macro concerns ratcheting up, defensive names like NetLink NBN have proven to be resilient.
Over the course of the last three months, NetLink NBN has achieved a total return of 6.1 per cent, relative to the negative 1.1 per cent and negative 2.8 per cent registered by the FTSE ST Real Estate Investment Trusts Index and Straits Times Index, respectively.
We do acknowledge the inherent concerns with NetLink NBN's regulated business structure - for example, regulatory review risks and uncertain opportunities in growing the regulated asset base - but these are relatively unaffected by the ongoing trade tensions.
We continue to stay constructive on NetLink NBN and retain our fair value estimate of 90 cents.
Singtel | Buy
Oct 10 close: $3.14
Target price: $3.94
Broker: UOB Kay Hian, Oct 10
Singtel has stepped up efforts to extract revenue synergies from Optus and its regional mobile associates. Collaborations in mobile payments, gaming and e-sports also build stronger rapport with mobile customers, especially the millennials.
We view these initiatives positively because: (a) They build "sticky" customer relationships. (b) They are capex-light and do not involve expensive acquisitions. (c) They enhance cohesiveness and collaborations across Singtel, Optus, Telkomsel, Bharti Airtel, AIS and Globe Telecom, leveraging on economies of scale with more than 700 million mobile subscribers across six countries.
With the mobile payment platform in place, Singtel's goal is to build a vibrant digital market place. Customers can purchase and download games and e-sports. In the future, the platform could be expanded to distribute financial services, such as insurance and micro loans.
Our target price for Singtel is $3.94 based on discounted cash flow (required rate of return: 6.25 per cent, growth: 1.5 per cent).