Brokers' Call

OCBC analysts expect a better FY17 for BreadTalk as it keeps its cautious approach to expansion.
OCBC analysts expect a better FY17 for BreadTalk as it keeps its cautious approach to expansion.ST FILE PHOTO


Broker: UOB Kay Hian

Call: Buy

Target price: $1.11

There is room for growth from buying yield-accretive acquisitive properties.

Management is actively looking to forward-renew expiring leases and executing defensive measures like asset enhancements to boost overall rents and accepting shorter-term leases to mitigate rental pressure.

The resilient population growth in Australia over the next four years will likely translate into increased domestic consumption benefiting consumer-product tenants and tenants with e-commerce exposure.


Broker: OCBC Investment Research

Call: Hold

Target price: $1.07

BreadTalk Group's third-quarter results came in within expectations. Revenue was down 2.7 per cent year on year to $157.3 million while profit after tax and minority interests rose 107.7 per cent to $3.3 million.

The group's cost-management initiatives, particularly for the bakery segment, have been bearing fruit.

Looking ahead, we expect a better FY2017 as the group keeps a cautious approach to expansion while being focused on improving earnings quality for each of the three segments.


Broker: OCBC Investment Research

Call: Hold

Target price: $0.81

Genting Singapore posted a strong set of results for the third quarter.

Revenue was in line with expectations: Third-quarter revenue dropped 8.6 per cent year on year to $581.5 million. However, adjusted earnings before interest, taxation, depreciation and amortisation beat our expectations at $233.6 million, 11.6 per cent higher year on year.

This was due to the greater-than-expected cost-savings from its right-sizing exercise in the second quarter.

Management appears optimistic with regard to the Japanese Diet's casino Bill debate, which is expected to take place on Wednesday.

Having scaled down its VIP segment and taken less credit risk, Genting Singapore appears to be in better stead in this tough operating environment.


Broker: CIMB

Call: Hold

Target price: $10.47

Despite low oil prices and a halving of fuel-hedging losses, SIA has not been able to keep the cost savings due to heavy competition which required a price response.

Second-quarter core profit was down 26 per cent year on year despite spot oil prices declining 16 per cent and fuel- hedging losses declining 52 per cent year on year.

With the exception of year-on-year improvements in the operating profits of Scoot and Tigerair, the earnings of SIA mainline, SilkAir and SIA Cargo all weakened, as yields and passenger load factors came under pressure, continuing a trend seen over the past 18 months.

SIA pointed to persistent "excess capacity and aggressive pricing" in the market "exerting pressure on loads and yields".

A version of this article appeared in the print edition of The Straits Times on November 07, 2016, with the headline 'Brokers' Call'. Subscribe