ST Engineering | Buy (Maintained)
Target price: $3.97
Sept 6 close: $3.30
Broker: RHB Research, Sept 6
ST Engineering has signed an agreement to provide engine maintenance, repair and overhaul (MRO) services for the Boeing 737NGs belonging to Jet Airways.
As part of the contract, ST Engineering will provide an integrated suite of engine MRO solutions, including off-wing engine heavy maintenance checks, on-wing services as well as technical support. These services will be provided over a period of six years beginning next year.
The order win is positive for the component engine repair and overhaul division of aerospace, which has seen high utilisation rates and an uptick in shop visits since late last year.
Its outstanding $13.4 billion order book offers a two-year revenue visibility.
It has outperformed the Straits Times Index (STI) by 7.3 per cent this year and offers a dividend yield of 4.6 per cent, higher than the 4 per cent yield for the STI.
OUE Limited | Buy (Maintained)
Fair value: $2.25
Sept 6 close: $1.57
Broker: OCBC Investment Research, Sept 6
With the asset enhancement initiatives completed and asset stabilised, we believe that OUE Downtown's offices could be a candidate for divestment to OUE Commercial Reit.
With the potential for healthy rental reversions ahead, improving sentiment in the Central Business District office market and firm capitalisation rates, we think that it makes sense for OUE to explore capital recycling at this point in the cycle.
OUE had been cautious in its land bids as the group was concerned about thinning property development margins, even prior to the latest set of cooling measures.
In our opinion, this has turned out to be an astute move.
Singapore hospitality trusts | Neutral
Broker: OCBC Investment Research, Sept 5
The second-quarter results for the Singapore hospitality real estate investment trusts (Reits) under our coverage were all within expectation, albeit many on the lower end.
The Q2 revenue per available room (RevPAR) growth figures were generally disappointing.
We continue to expect robust leisure demand, soft corporate demand and the continued outperformance of mid-tier hotels in Singapore.
We push back our expectations of a strong RevPAR pickup from the second half of this year to the next, and believe defensive names from other sub-sectors may outperform hospitality.
Within hospitality, Far East Hospitality Trust remains our top pick given its pure-play Singapore-based portfolio, the mid-tier positioning of its hotels and the higher chance of operational outperformance given its relative underperformance prior to this year.