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PropNex Ltd A new altitude

Recommendation: ACCUMULATE Status: Maintained Target Price: 2.080

  • 3Q21 PATMI spiked 113% YoY to S$16.5mn. 9M21 revenue and PATMI were within expectation at 73%/72% of FY21e forecast.
  • The fastest growing segment was private resale, revenue tripled to S$70.6mn.
  • The company aims to pay out 75%-80% of FY21 PATMI as dividends. We raise our FY21e DPS by 17% from 11.5 cents to 13.5 cents per share. This implies FY21e dividend yield of 7%.
  • Our FY21e forecast and DCF target price (WACC 9.8%) of S$2.08 is unchanged. Our ACCUMULATE recommendation is maintained. PropNex’s revenue run rate is at a new level of around S$200mn per quarter, up from S$100mn in the prior years. Supporting this new altitude of revenue will be the record growth in agents, maiden revenues from collective sales and healthy property transactions aided by a recovering economy, low interest rates and rising replacement costs.
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ComfortDelGro Corp Ltd – Restructuring whimper but cash rolling-in

Recommendation: BUY Status: Maintained Target Price: 1.80

  • 3Q21 earnings was below expectations. 9M21 revenue and PATMI was 70%/60% of our FY21e forecast respectively. Taxi rebates in 3Q21 resulted in operating losses.
  • Downtown Line (DTL) transitioning to NRFF 2 resulted in a net S$15mn saving. But new bus contract extension may lower future operating earnings by S$34mn.
  • The downside protection of earnings from NRFF 2 was lower than expected. At the peak of the restrictions last year, savings was only around S$15mn. Any shortfall in takings is limited to the license fee payable to authorities. We lower our FY21e PATMI by 8%. Our DCF target price (WACC 8%) is lowered modestly to S$1.80. The downside in revenue is offset by lower than expected capital expenditure. Operating cash-flows for the company remains healthy, coupled with record cash levels. Comfort is our transport proxy for Singapore’s reopening and normalisation of social and work activities.
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Lendlease Global Commercial REIT – Positive reversions and impending acquisition

Recommendation: ACCUMULATE Status: Upgraded Target Price: 0.970

  • No financials provided in the operational update. High-single digit reversions were a positive surprise. High occupancy of 99.8% maintained. Slight 3.1% increase in tenant sales.
  • Upgrade from NEUTRAL to ACCUMULATE with DDM TP (COE 7.7%) raised from S$0.87 to S$0.97. Estimates revised following a change of analyst. We raise our forecasted contributions for the 31.8% stake in JEM and Grange Road Carpark redevelopment project. FY22e/23e DPU increases by 8.6%/7.7%. TP climbs 11.5% due to the adjustment in earnings and a lower cost of equity assumption of 7.7% (prev. 8.0%). Impending acquisition of the remaining stake in JEM is a catalyst for LREIT.
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Asian Pay Television Trust – 2022 dividends maintained

Recommendation: ACCUMULATE Status: Downgraded Target Price: 0.150

  • 3Q21 results met our expectations. 9M21 revenue and EBITDA at 74%/77% of our FY21e forecasts. The company guided that FY22 DPU will be maintained at 1 cent.
  • 3Q21 free cash-flows of S$24mn supports the quarterly dividend payout of S$4.5mn and dividend yield of 7.4%.
  • Our FY21e forecast and target price of S$0.15 is maintained. Valuations of 9x FY21e EV/EBITDA are a 20% discount to Taiwanese peers on account of its smaller scale and higher leverage. We downgrade our recommendation from BUY to ACCUMULATE due to the recent share price performance. Growth in broadband and lower capital expenditure is offsetting the weakness in key basic cable TV revenue. Another catalyst will be 5G data backhaul revenue from mobile operators.