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CGS CIMB |
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China Aviation Oil (CAO SP) 1Q20 Brief Financial Update Disappoints
Keep BUY, with SGD1.30 TP, 28% upside and c.5% yield. China Aviation Oil reported disappointing net profit for 1Q20. A slump in aviation traffic amidst COVID-19 and sharp oil price fall had impacted 1Q business operations. We see CAO as a good proxy to Chinese aviation traffic, which we expect to improve in 2H20. Moreover, a strong net cash balance sheet enables CAO to undertake large acquisitions. Nevertheless, we place our rating and TP under review pending further management updates.
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Keppel DC REIT Accumulate on weakness
■ 1QFY20 DPU of 2.09 Scts (+8.6% yoy) came in line at 22% of our forecast. ■ We continue to like KDC due to the high demand for data centres. ■ However, we think there is limited upside given its strong price appreciation. Downgrade from Add to Hold. Accumulate on price weakness.
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UOB KAYHIAN |
DBS VICKERS |
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Oversea-Chinese Banking Corporation (OCBC SP) 1Q20 Results Preview: Striving To Maintain Stable Dividends
We forecast net profit of S$757m for 1Q20, down 38.5% yoy and 39.1% qoq, affected by lower contribution from insurance, lower trading income and additional specific provisions for exposure to Hin Leong. On a brighter note, management will strive to maintain DPS at current 56 S cents per year (28 S cents every six months), supported by robust CET-1 CAR of 14.9%, which is the highest among local banks. We see value with OCBC trading at 0.8x 2020 P/B and dividend yield of 6.4%. Maintain BUY but cut target price to S$9.78.
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Keppel Infrastructure Trust Stable dividend is the key USP
No impact on distributions from current scenario; maintain BUY. Keppel Infrastructure Trust (KIT) maintained its record of steady DPUs in 1Q20, as expected, on the back of better-than-expected distributable cash flows for the quarter. For FY20/21, we are moderating our EBITDA forecasts for KIT by around 17% and 11% respectively, owing to the expected impact of the COVID19 situation on Ixom in particular, including translation impact arising from a weaker AUD. This is however, not expected to impact DPUs as the Trust has enough gross cash buffer to smoothen out any minor one-off shortfalls. Distributable cash flows for KIT are in any case significantly immune to economic cycles as most assets derive availability-based revenues. No liquidity or solvency issues are seen either for the Trust.
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