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ComfortDelGro
On the road to recovery
■ While Covid-19 Omicron variant has dampened mobility in Jan/Feb, we note the meaningful recovery across CDG’s key operating geographies in Mar.
■ Rail ridership recovery and new framework agreement with LTA should help boost CDG’s public transport segment operating profit by 50% in FY22F.
■ Taxi segment should also benefit from lower rental rebates yoy, but pace of reduction could be limited near term. Reiterate Add and TP of S$1.80.
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Parkway Life REIT (PREIT SP)
Potential Catalyst In The Making
Sponsor IHH Healthcare has to consider recycling assets if it decides to acquire Ramsay Sime Darby for RM5.67b (S$1.83b). We estimate that the potential acquisition of Mount Elizabeth Novena Hospital from IHH for S$1,286m could increase PREIT’s 2023F DPU by 17% to 17.6 S cents and raise our target price from S$4.82 to S$5.42.
Management might consider pursuing the acquisition over two phases to make the sizeable deal more digestible. Maintain HOLD. Target price: S$4.82.
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Telechoice (S$0.14, unchanged) announced that its wholly-owned subsidiary, NxGen CommunicaƟ ons Pte Ltd (“NxGen”), has entered into an agreement with a Singaporean telecommunications conglomerate and Keppel Corp (S$6.55, down 8 cents) to acquire their enƟ re ownership interests in Radiance Communications Pte Ltd (“Radiance”).
The aggregate purchase price of the acquisition is S$1.25 million in cash, subject to certain purchase price adjustments.
At S$6.55, market cap of Keppel Corp is S$11,845mln, FY21 P/E is 11.6x, current P/B is 1x and dividend yield is 5%. According to Bloomberg consensus, there are eleven buy and one sell recommendations on the stock while its consensus target price is S$6.85. Coupled with its dividend yield, this represents a potential upside of 9.6% and our recommendation is ACCUMULATE. We continue to like Keppel Corp’s asset monetization strategy to divest non-core assets and refocus capital on its core growth initiatives in its path to reach double
digit ROE targets. The continued strong oil and gas prices will help to accelerate Keppel Corp’s move to gain traction in the renewable energy space.
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