Compiled by Cai Haoxiang, The Business Times
BREADTALK GROUP | BUY
TARGET PRICE: $1.92
JUNE 9 CLOSE: $1.66
DBS Group Research, June 9
We reiterate "buy" on BreadTalk as we believe its earnings will continue to turn around and deliver growth. Q1 2017 earnings have validated that its food court business is on track for a turnaround.
Apart from earnings growth, we see potential catalysts from the possible sale of AXA Tower/CHIJMES and revaluation of Beijing Tongzhou Development.
BreadTalk's valuation, based on its core business (ex-property investments), is compelling at 16.2 times 2017/18 forecast earnings. We believe consensus has yet to factor in BreadTalk's investment properties into its share price.
CHINA AVIATION OIL | ADD
TARGET PRICE: $2.20
JUNE 9 CLOSE: $1.655
CIMB Research, June 8
The Belt and Road Forum for International Cooperation held last month reaffirmed China's "internationalisation" goals and provides a further boost to the ongoing developments in Chinese international air routes and transport.
China Aviation Oil (CAO) benefits as its key earnings drivers are firmly intertwined with China's aviation industry.
Year to date April 2017, the aggregate long-haul available-seat-kilometres of the three largest Chinese airlines continue to grow.
This is a boon for CAO as its core jet fuel supply business is driven by outbound travel. We continue to favour CAO for its prime position in key global aviation markets (US and China) and its healthy balance sheet.
Maybank Kim Eng Research, June 8
The March 2017 results quarter provided us with an inflection point for core profit growth after many successive periods of decline.
Consensus Straits Times Index earnings expectations also seem to be quite moderate suggesting the downgrade cycle is likely at its tail end.
We raise our base case 12-month forward index target derived from an equal weight outcome of three approaches to 3,180 points (up 6 per cent from 3,000 previously).
Our main sector overweights are in property and healthcare while our key underweight sectors are TMT (tech, media and telecom) and consumer.
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