Brokers' Call: mm2 ASIA

mm2 ASIA

Brokers: UOB KayHian

Call: Buy

Target price: 74 cents

mm2 recorded a net profit after tax of $8.2 million for financial year 2016, an increase of 60.8 per cent compared with $5.1 million in financial year 2015, due to a growth in the core business and contributions from newly acquired subsidiaries and its cinema business.

By financial year 2017, acquisition of the three other cinemas from Mega Cinemas Management is expected to be completed. The year will also see full-year contributions from the two newly acquired Cathay cinemas. mm2 expects North Asia to contribute a larger slice of revenue.

General and administrative expenses increased 177 per cent in 2016 because of higher employee compensation costs as a result of an increase in senior management and employees resulting from the new acquisitions and cinema business.

But, the firm's fundamentals remain intact.

Religare Health Trust

Brokers: DBS Group Research

Call: Hold

Target price: 97 cents

Religare Health Trust (RHT)'s expansion plans and exposure to the growing demand for healthcare services in India are positive developments, but these attributes have largely been priced in.

In addition, there may be pressure on dividend per unit (excluding potential special dividends) from 2017, following management's decision to reduce distribution payout.

RHT is expected to continue to deliver decent organic growth on the back of a robust outlook in the Indian healthcare sector and steady increase in average revenue per operating bed. Inorganic initiatives, which include ongoing development projects in India, will add 279 more beds by financial year 2017.

RHT has significant debt headroom, which allows it to easily support its expansion plans and pursue accretive acquisitions.

A version of this article appeared in the print edition of The Straits Times on May 30, 2016, with the headline 'Brokers' Call'. Print Edition | Subscribe