Brokers' take

JAPAN FOODS HOLDING | BUY

TARGET PRICE: $0.54

MAY 29 CLOSE: $0.47

KGI Research, May 29

With same-store sales stabilising for the year, store closures are expected to stabilise likewise going forward.

The number of local outlets has grown in the 4.0 per cent to 4.5 per cent annual range - a net increase of two stores a year - over the last three years and management sounded an upbeat tone on accelerating the pace of new store openings from here on.

We continue to hold our forecast of a conservative net increase of three new stores a year in our base case assumptions for now. Japan Foods remains relatively undervalued below its peers and continues to offer an appealing dividend yield of 4.6 per cent.

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SINGAPORE PROPERTY SECTOR | POSITIVE

Maybank Kim Eng Research, May 29

We turn "positive" on property developers, expecting catalysts from a potential rebound in property prices.

Strong home-buying interest could drive a sharp decline in unsold stock and allow developers to raise prices.

Hence, we believe home prices can pick up even without further policy easing. And while the occupier market remains soft, keen interest in commercial assets has led to record prices in recent transactions.

We believe developers will increasingly be valued for their investment properties. We raise target prices by 12 per cent and upgrade Cambridge Industrial Trust and Ho Bee Land to "buys" from "holds".

With the largest local exposure in our coverage, UOL remains our top pick as we deem it the best proxy for a price rebound in Singapore.

Maintain "hold" on CapitaLand. Risks to our positive view include a surprise tightening of policy measures and a sharp spike in interest rates.

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SEMBCORP INDUSTRIES | ACCUMULATE

TARGET PRICE: $3.50

MAY 29 CLOSE: $3.18

Phillip Securities Research, May 29

During Q1 FY17 results briefing, the new CEO of Sembcorp Industries (SCI) signalled that a strategic review will be underway over six months to improve the growth of the group.

We believe SCI's valuation is suppressed due to Sembcorp Marine's underperformance and volatile earnings.

If the marine business is stripped off, the valuation of the rest of the businesses of the group will be freed up. Therefore, the market is looking forward to the review and contingent corresponding restructuring. It could be the catalyst to favour higher valuation of the group.

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