Brokers' Call

Apac Realty | Buy

Target price: $1.32

June 8 close: 88.5 cents

DBS Group Research, June 6

Apac Realty has proposed to acquire a commercial property at Lorong 6 Toa Payoh for $72.8 million. The property will serve as the headquarters of ERA Asia Pacific, and a permanent place of business for the group to provide enhanced facilities for ERA's agency operations, including new office space for agents and improved training areas. Completion is expected by end-August. Apac intends to retain about 50 per cent of the space for its own use, including sub-leasing to its own agents, and the balance leased out to third parties. It will still retain its current office space at Mountbatten. The purchase consideration will be funded by a combination of internal funds (including initial public offering proceeds) and bank financing, likely in the 20:80 proportion.


Venture Corp | Buy

Fair value: $28.83

June 8 close: $21.13

Maybank Kim Eng, June 5

Venture's share price has shed 25 per cent since its April high, due to cyclical concerns and operational "opacity". However, our dashboards suggest that its customers remain confident about their 2018 prospects, anchored by robust capital expenditure spending, especially in the United States. This corroborates with what Venture has been sharing, that forecasts from its customers are healthy. Venture remains a beneficiary of economic upcycle and multifaceted secular growth drivers. In its seasonally stronger Q3 and Q4, earnings deliveries and potential improved clarity from management are expected to provide catalysts. A stronger US dollar would also be positive for Venture and Singapore tech firms. But vulnerabilities include possible wage hikes in Malaysia, higher logistics costs and a drop in its customers' outlook if trade tensions escalate.


Sembcorp Industries | Buy

Fair value: $4.50

June 8 close: $2.94

DBS Group Research, June 4

Sembcorp has reached agreement to acquire UK Power Reserve (UKPR) - Britain's largest flexible distributed energy generator - for £216 million (S$386 million). The sellers are private equity investors Inflexion and Equistone (each holding 42.5 per cent stake) and UKPR's management (with a 15 per cent stake). The acquisition strengthens Sembcorp's presence in Britain's utilities space and is in line with the group's revamped policy to rebalance its energy portfolio towards developed markets.

A version of this article appeared in the print edition of The Straits Times on June 11, 2018, with the headline 'Brokers' Call'. Print Edition | Subscribe