Friday, 29 November 2013


UOBKayhian on 29 Nov 2013

Optimistic outlook, sleeker operations and a crown jewel asset
Maintain BUY and target price of S$0.33. Hafary’s status as Singapore’s leading tile supplier suggests that it will be a major beneficiary of the increasing housing in Singapore, as it has been a key tile supplier to the HDB BTO programme in FY13. Its newly-completed headquarters (HQ) at 105 Eunos Ave 3, could also potentially be its next crown jewel, due to its close proximity to the upcoming Paya Lebar Commercial Hub in 2014.

  • Market leader and beneficiary of Singapore’s housing boom. Hafary estimates that it has a market share of about 50% of the general segment (eg interior design firms, walk-in customers) and 15% of the project segment (eg HDB, developers). Revenue from the general and project segments saw an impressive CAGR of 21.5% and 38.1% respectively from FY07-13. As the number of housings in Singapore increases, the general market for Hafary is also likely to get bigger as resale flat owners renovate their new homes.
  • Earnings boost from new rental income source Hafary recently relocated to its new HQ at 105 Eunos Ave 3. Boasting a net lettable area of 132,000sf, Hafary will be leasing out unutilised floor space of approximately 66,000sf as a new source of income. Based on average recent rental transactions in the vicinity (S$1.80psf) , we expect Hafary to generate additional annual rental income of about S$0.8m (14.0% of Hafary’s FY13 core earnings) based on the 66,000sf. Currently 40,000sf has been leased out.
  • Cost savings from streamlined operations. The new warehouse facility at Changi North is also expected to result in huge cost savings for Hafary. In the past, delivery trucks had to stop at three different warehouses to pick up tiles. With the larger warehouse facility, Hafary has housed all its tiles in a singular location, (eg. retail segment tiles at Changi, project segment tiles at Defu) allowing the company to enjoy huge cost savings from reduced manpower and transport costs.
  • Crown Jewel Asset. We visited Hafary’s new office at 105 Eunos Ave 3 and believe this newly-completed HQ could be Hafary’s new crown jewel. The new HQ with a remaining tenure of 25 years is strategically located near the future Paya Lebar Commercial Hub, and is a 10-minute walk from Paya Lebar Mrt Station.With the impending TOP of the Paya Lebar Square by 2Q14, fair value of the new HQ is currently worth approximately S$50m according to Hafary’s FY13 annual report, which is S$28.5m (S$0.066/share) in excess of its book value.
  • Nothing to lose, only something to gain. Hafary recently took a full impairment of S$4m on its investment in associate, HCCM. After which, no further loss is expected to be recognised from HCCM going forward. While management is optimistic that operations will gradually stablise, they are also open to cashing out of HCCM if a good opportunity arises. As the investment in HCCM has been fully impaired, any proceeds from the possible sale will be recognised as a gain on disposal for Hafary

Ascott Residence Trust

CIMB Research, Nov 27
OUR DDM (dividend discount model) based target price (at discount rate of 8.5 per cent) is unchanged at S$1.15.
We upgrade Ascott Residence Trust (ART) to Neutral from Underperform, as we believe negatives from its rights issue have mostly been priced in. We also see potential acquisitions as re-rating catalysts.
ART's share price has declined c.9 per cent since the announcement of its 1-for-5 rights issue (at 19.5 per cent discount to the theoretical ex-rights price of S$1.24 and 23.7 per cent to proforma net asset value of S$1.31) and our subsequent downgrade.
At 0.93 times FY14 P/BV and 6.9 times FY14 dividend yield, we think that ART's valuations are reasonable and that the rights issue negatives have been priced in.
Its improved net gearing of 34.3 per cent and debt headroom of S$313-640 million (at 40-45 per cent gearing) put ART in a better position to pursue potential acquisitions and asset enhancement initiatives.
The potential acquisitions could be located in China, Japan, Malaysia or Australia, which are likely to have varying acquisition yields and withholding taxes.
The acquisitions, expected to be announced by H1-14, could potentially lift its distribution per unit (DPU).
We have yet to factor them into our model due to a lack of clarity on asset and acquisition yields.
Investors should remain Neutral as ART's valuations are reasonable at 0.93 times FY14 P/BV and 6.9 times FY14 dividend yield. Its peers are trading at an average of 7.3 times FY14 dividend yield.

Singapore Banks

Maybank Kim Eng Research, Nov 27

Raising sector to Overweight.
WITH short-term rates expected to bounce in early 2015, a new re-rating wave could be unleashed as early as H2-14. The earnings upswing may be powerful after several years of depression in net interest margin.
We project 3-month Singapore dollar Sibor to rise to 1.0 per cent by end-2015 and to 2.0 per cent by end-2016 (currently 0.4 per cent). We fine-tuned our forecasts for FY13-15 (and introduced FY16 forecasts) and used P/E as our prime valuation guide (instead of P/BV).
DBS still our top pick; UOB raised to BUY.
We rank DBS highly as it is well positioned to benefit the most from a higher interest rate given its strong deposit franchise and liquid balance sheet.
The on-going transformation at DBS should support a higher medium-term ROE profile. We foresee DBS enjoying the strongest EPS CAGR of 15.6 per cent over FY13-16.
We also upgraded UOB to BUY on the following merits: (1) its large exposure to the resilient ASEAN market allows it to capture Asian consumer affluence; (2) management's discipline in previous acquisition bids suggests low risk of overpaying for Wing Hang; and (3) cheaper P/E valuation.
OCBC is our least preferred - rated at HOLD - for its volatile earnings profile, and risk of overpaying for Wing Hang.
In this report, we take a closer look at asset quality and liquidity to address concerns arising from a rapid 17.4 per cent loan compound annual growth rate (CAGR) since September 2010.
We conclude that industry asset quality should remain resilient because:
(1) the majority of the loan growth came from the traditionally safer housing loans and short-term US dollar trade loans;
(2) strong household balance sheets;
(3) decent corporate balance sheets; and
(4) a growing economy.
In reality, Singapore dollar liquidity remains ample with loan to deposit ratio (LDR) of 82 per cent. Stripping out non-Singapore dollar loans from the domestic banking unit's loans, the Singapore dollar LDR was in the region of 82 per cent at end-September 2013, paced by DBS (73 per cent), OCBC (84 per cent) and UOB (92 per cent).
While US dollar LDR is high (132.6 per cent for DBS; 109.9 per cent for OCBC; and 84.4 per cent for UOB), the risk of a US dollar crunch (US dollar loans accounted for 25.8 per cent of our universe's total loans at end-Sept 2013) is minimised by the use of commercial papers and currency swaps.
These short-term trade loans can be run down quickly in the face of a liquidity crunch. Furthermore, Singapore banks have proven to be able to raise substantial US dollar deposits. DBS's US dollar deposits jumped 24.4 per cent q-o-q in Q3-13.
What's ahead for 2014?
As we head into 2014, we expect the market to focus on three key issues:
(1) Asset-quality risk. After several years of strong loan growth amid soaring real-estate prices, every now and then, there is concern over credit quality erosion. Asset quality has remained surprisingly strong over the past three years, as reflected in the low credit charges and non-performing loan (NPL) ratio. Any credit quality slippage would dampen earnings growth.
(2) Liquidity risk. With domestic banking unit (DBU) loan-to-deposit ratio (LDR) at 101.8 per cent at end-Sept 2013, system liquidity is at its tightest since Oct 1998.
This carries two key negative implications: (a) loan growth could be curbed, and (b) there may be irrational competition for deposits.
(3) Direction of net interest margin trend. The industry net interest margin (NIM) has been on a consistent decline over the past few years as interest rates remained depressed. With a higher probability of a tapering of quantitative easing sometime in 2014, the key question is whether the industry NIM would start to trend upwards.
Singapore banks: NEUTRAL
DBS: Buy, UOB: Buy, OCBC: Hold

Thursday, 28 November 2013

CapitaMall Trust

Maybank Kim Eng Research, Nov 27
WE downgrade CapitaMall Trust (CMT) to HOLD on valuation grounds and lacklustre distribution per unit (DPU) growth prospects as most of its eligible portfolio malls have already undergone asset enhancements (little boost to our DDM (dividend discount model)-derived TP).
The remaining known drivers include:
(1) Bugis Junction, which will complete its S$35 million asset enhancement initiative (AEI) with incremental S$3.1 million net property income (NPI) per annum, by Q3-14;
(2) Tampines Mall with its S$36 million AEI (with incremental S$2.9m NPI per annum) by Q4FY15; and,
(3) the active leasing of Westgate and Westgate Tower (30 per cent stake) in Q4FY13 and Q4-14, respectively.
The two AEIs are relatively small with projected increment in capital value (net of capex) of S$22.1 million and S$16.4 million, respectively, adding about three Singapore cents to our revalued net asset value (RNAV).
We are forecasting an unexciting 2.6 per cent DPU compound annual growth rate (CAGR) for 2013-2016.
All eyes are on Westgate. CapitaLand announced in August that it will retain its corporate headquarters at Capital Tower in the CBD, reversing its earlier intention to move to Westgate Tower a year ago.
CapitaLand was originally slated to occupy half of Westgate Tower. This means all 320,000 square feet (sq ft) of net lettable area (NLA) in the tower is now available for lease by end 2014.
All 314,000 sq ft of office space in the Jem development next door, slated to complete later this year, has been fully leased with key tenants being the Ministry of National Development, the Building & Construction Authority and the Agri-Food & Veterinary Authority.
Westgate will face competition in its next rent review cycle in 2016-2017 when Sim Lian's nearby mixed development project in Venture Avenue (with minimum 90 per cent office component or about 500,000 sq ft office space) comes onboard.
We are forecasting average passing rents of S$16.50psf/month for Westgate retail and S$7.50 for Westgate Tower.
Acquisitions are unlikely in the near term.
CMT's gearing is at a comfortable 34.8 per cent. While management is open to acquisitions, we think any acquisition from its sponsor is unlikely to happen soon.
This is because CMA's most stabilised asset, ION Orchard, remains a major contributor to recurrent income while the other properties (The Star Vista, Bedok Mall and 50 per cent stake in Westgate) are either not stabilised or still under construction.
The redevelopment of Funan (additional gross floor area of 315,561 sq ft already approved for office use) remains a possibility, but we believe the preference would be to change it to retail use, either in whole or in part.
There is also market talk of CapitaLand selling strata offices in Westgate Tower on a whole floor basis.
The eventual materialisation of Funan's AEI plans and Westgate Tower strata office sales may be positive catalysts for the stock, but until then, we derate CMT to HOLD with a TP of S$2.10.

IHH Healthcare

CIMB Research, Nov 26
IHH's Q3 earnings offered no surprises, despite seasonal effects. The good news is the growth story at its new hospitals, while the bad news is confirmation of our view that rate charges at Singapore's hospitals have peaked. Its valuation remains the only ugly facet of this story.
Q3-13 and 9M-13 core earnings were in line, accounting for 21 per cent and 78 per cent, respectively of our FY13 numbers.
We make no changes to our forecasts and our SOP (sum of parts) based target price stays. While we like the IHH franchise, we struggle to find any near-term catalysts.
As we expect better earnings only in FY15-16, the current valuation is decidedly unexciting.
Q3FY13's core net profit was driven by growth at its new hospitals and savings in finance costs despite seasonal effects.
The better numbers were offset by depreciation and finance costs relating to new hospitals that had to be recognised in the P&L after completion. The good news is that Acibadem Bodrum has achieved Ebitda breakeven.
Last week, we mentioned there was a bigger issue with peaking charges and revenue intensity in Singapore, rather than the decline in Indonesian patients. Indeed, such patient admissions jumped by 9 per cent y-o-y in Q3FY13, allaying fears of a weaker rupiah.
The average revenue per inpatient in Singapore grew by only one per cent from Q2FY13, despite favouring S$-to-RM translation.
The balance sheet is still healthy given its savvy cashflow management and structured capex programme. Our main gripe is the uncertainties in FX translational differences in the income statement and balance sheet, which further blurred any meaningful comparisons across its markets.
Although IHH should continue to benefit from growing private healthcare consumption and revenue intensity in all its three markets, improving entry points and fundamentals for its regional peers may provide investors with better short- to mid-term returns. we keep IHH at Neutral, with a TP of $1.72.


OCBC on 28 Nov 2013

2013 is looking to be the weakest year in terms of earnings for COSCO Corp (Singapore). After recording net profit of S$139.7m and S$105.7m in FY11 and FY12, respectively, net profit for FY13 looks set to be below S$50m. Indeed, after five quarters of either little cost overruns or reversal of provisions made earlier, COSCO returned to making provisions on its construction contracts again, dousing hopes that it is gaining footing on the execution front. Looking ahead, we expect the operating environment for the group to remain difficult. Any credit tightening in China may also affect the ability of customers to meet their financial obligations. Maintain SELL with S$0.61 fair value estimate.

2013 – a year to forget
2013 is looking to be the weakest year in terms of earnings for COSCO Corp (Singapore). After recording net profit of S$139.7m and S$105.7m in FY11 and FY12, respectively, net profit for FY13 looks set to be below S$50m. Indeed, after five quarters of either little cost overruns or reversal of provisions made earlier, COSCO returned to making provisions on its construction contracts again, dousing hopes that it is gaining footing on the execution front. For 4Q13, the group may even have to reverse profits on its “substantially completed” drillship that is mired in arbitration proceedings with customer Dalian Deepwater Development, unless COSCO is able to quickly find another buyer for its drillship.

2014 – also looks challenging
Looking ahead, we expect the operating environment for the group to remain difficult. The oversupply of yard capacity in China continues to roil the shipbuilding industry. Outlook for the offshore industry is more positive, but COSCO – being a new entrant – may not be able to secure many good quality contracts, and the fact that it is executing a wide range of products that are new to the company means that margins remain vulnerable to execution risk.

Headwinds remain; maintain SELL
As of 30 Sep 2013, the group’s order-book stood at US$7.2b with progressive deliveries up to 2015. However, many orders are likely to be executed at low margins. Though the group has a cash level of S$1.7b, it also has S$1.85b worth of debt maturing in a year (36% of which is secured and may be rolled over), not forgetting the substantial working capital that the group needs with its back-end loaded payments for its contracts. Moreover, any credit tightening in China may affect the ability of customers to meet their financial obligations. Maintain SELL with S$0.61 fair value estimate.

Wednesday, 27 November 2013

AIMS AMP Capital Industrial Reit

Voyage Research, Nov 26
AIMS AMP Capital Industrial Reit (AA Reit) has announced the proposed acquisition of a 49 per cent indirect interest in Optus Centre in Australia for about S$215 million.
The asset is a secure A Grade business-park office with a total lettable area of 84,194 sq m. The current rental rate is approximately A$290/sq m with fixed annual escalation of 3 per cent.
The asset is fully let to Optus Administration Pty Ltd and guaranteed by Singtel Optus Pty Ltd. The weighted average lease term of the asset is about 8.6 years, with an additional five-year renewal option.
The stake is purchased near the open-market value of S$215.4 million. The entire deal will be debt-financed, with a new five-year term loan facility of A$110.7 million and S$120 million from an existing SGD/AUD revolving credit facility.
Positive terms of the deal:
1) Quality tenant with long-term lease and built-in rental escalation;
2) Reasonable NPI (net property income) yield of about 7.9 per cent;
3) DPU (distribution per unit) accretive and will boost DPU by about 0.58 Singapore cent annually.
However, we are mindful of the leverage ratio, currency risk and unnecessary diversification. In particular, the borrowings/total assets will trend towards 41 per cent by FY2016 if we were to take into consideration AA Reit's existing project pipeline.
Management has commented that they have financial flexibilities in place (some of their assets are not collateralised) and part of the currency risk is hedged.
We retain our FY14 forecast dividend payout of 11 Singapore cents per share and increasing the FY15 forecast and FY16 forecast dividend payout by 0.6 Singapore cent. We also increase the cost of equity to 8.5 per cent to account for the additional risks. Maintain "Invest" with S$1.73 intrinsic value.

Land transport sector

Maybank Kim Eng Research, Nov 26
THE Fare Review Mechanism Committee (FRMC) recently proposed several changes to the existing fare-adjustment formula, which were subsequently accepted in full by the government. The inclusion of a rollover mechanism for annual fare adjustments is the biggest positive.
The changes made to certain components of the annual fare-review formula would also better align fare revisions to the cost structure of the Public Transport Operators (PTOs).
However, we are concerned over the proposal for the PTOs to contribute part of their fare revisions to the Public Transport Fund and await further clarity on this.
The Public Transport Council (PTC) is expected to announce its decision on a fare adjustment in 1Q2014.
With an estimated 8 per cent of accumulated fare revision not implemented in 2012/13, we expect significant fare hikes of 5 per cent per annum in the next three years, before reverting to a more normalised annual rise of 2.7 per cent.
Coupled with our long-term ridership forecasts of 2.3 per cent per annum, we expect sector revenue to be 43 per cent higher in 2018.
The Downtown line (DTL) to be operated by SBS Transit will open in three stages over the next four years. We believe that traffic cannibalisation would have a significant negative impact on SMRT once DTL Stage 2 operates in 2016.
While the opening of an extension to NSEWL's western leg in the same year could provide some respite, we still expect a net negative impact. We estimate the launch of DTL Stage 2 would put S$139 million or 17 per cent of SMRT's fare revenue base under threat.
When compared against the depressed profit base of SMRT, this potential income loss will be material (SMRT FY3/13 Ebit: S$127 million).
We believe the market has largely ignored this negative implication and expect growing concern in the years ahead.
We see the current business models for the PTOs as unsustainable and expect imminent changes.
Shifting to a tender-based bus operating model appears likely, as evidenced from the packages of routes tendered out by the LTA over the past year. We also expect a transition to the new rail financing (NRF) framework for all existing rail lines over the next few years.
However, the lack of clarity over transition terms for the existing rail network remains a key concern for SMRT.
With a bigger fare-based revenue exposure, SMRT will be a bigger beneficiary to the impending fare hike. However, we continue to question the attractiveness of the stock as an investment and maintain our negative view on SMRT due to negatives from:
1) Cannibalisation effects of the DTL;
2) Uncertain transition terms for its existing rail network; and
3) Elevated gearing driven by higher capital spending after prior years of under-investment.
Anchored by stable acquisition-led earnings growth from its overseas units, ComfortDelGro (CDG) is our preferred exposure to the sector.
Furthermore, CDG's valuation (15 times P/E) remains more attractive than SMRT (19 times P/E). Maintain "Sell" on SMRT (TP: S$0.90) and "Buy" on ComfortDelGro (TP: S$2.39).
Land transport sector: NEUTRAL
ComfortDelGro: BUY

Wilmar International Limited

OCBC on 26 Nov 2013

Wilmar International Limited (WIL) recently announced that it has formed a JV with Tereos Internacional to manufacture corn starch in China – this is its second commercial collaboration with Tereos. However, we do not see any immediate boost to earnings. Meanwhile, we note that WIL’s share price has done very well (+17%) since our upgrade to Buy on 6 Sep; but as WIL looks fairly priced around current levels versus unchanged S$3.55 fair value (based on 12.5x FY14F EPS), we opt to maintain our HOLD rating. We also advocate taking profit closer to S$3.70.

Forms China corn starch JV
Wilmar International Limited (WIL) recently announced that it has formed a JV with Tereos Internacional called Liaoning Yihai Kerry Tereos Starch Technology Co Ltd. The move will see Tereos acquiring 49% of the JV company from WIL’s subsidiary for RMB208m; the JV will engage in the operation of a corn starch facility in Tieling (Liaoning Province) with a current annual processing capacity of 700k tons of corn. According to WIL, the acquisition marks the second important step in the development of the major partnership with Tereos in the rapidly growing market for starch-based products in China. However, we do not see any immediate impact on earnings.

Shares already ran up sharply
Meanwhile, the recent recovery in CPO (crude palm oil) prices has lifted plantation stocks (WIL rose as much as 17% after our upgrade to Buy on 6 Sep), but we believe that some of these optimism may be overdone. For one, WIL is still a net buyer of vegetable oil (including CPO) and a continued rise of input prices could result in a margin squeeze for its consumer packs. Note that because cooking oil is an essential food item, it may also be subject to price caps should inflation in China rises faster than the government’s guidance. Secondly, the enthusiasm over the Indonesian government’s doubling of the bio-diesel mandate to 10% blend may be a bit premature. A recent Platts report suggested that the Pertamina tender may not offer as fat a profit margin as what the market is expecting. 

Maintain HOLD with S$3.55 fair value
Currently, WIL is trading close to our unchanged fair value of S$3.55 (based on 12.5x FY14F EPS), suggesting that the stock looks fairly priced around here. From a historical perspective, we see that WIL’s valuation is already close to its 2-year average. Hence, we opt to maintain our HOLD rating. We also advocate taking profit closer to S$3.70.

Tuesday, 26 November 2013

OSIM International

UOBKayhian on 26 Nov 2013

Let’s have tea!
  • OSIM has increased its stake in TWG Tea to 53.7% and will consolidate the latter’s earnings into its financial statements going forward. As OSIM looks to expand the outlets further in 2014, we believe this segment may eventually become a meaningful earnings contributor in the medium term.

  • Maintain BUY and target price of S$2.76, derived from our dividend discounted cash flow model and pegged at its 3-year historical PE of 15.7x to 2014F earnings.
  • OSIM reported its 19th consecutive set of record quarterly earnings in 3Q13 with net profit growing 16% yoy to S$23m. This was driven by strong revenue growth from new products and higher sales per store and per salesperson. Management remains upbeat on earnings outlook after sales of their uAngel and uInfinity massage chairs gained traction in the quarter. Management has also seen several trade-ins of the uDivine chairs, a product launched three years ago. This shows that OSIM is on the right track in creating long-term demand and brand loyalty to its OSIM chairs.
  • TWG Tea - the next crown jewel for OSIM. There are currently 22 TWG boutiques and OSIM targets to expand the network further in Singapore, Korea, Thailand and Malaysia. OSIM reiterated that each outlet continues to be profitable on its own with an annual 3-5% yoy same-store sales growth. In China, TWG Tea has penetrated into 60 luxury hotels and OSIM has plans to open 6 tea boutiques in the country next year.
  • Building a cash war chest with EBITDA margin of more than 20%. OSIM continues to generate very strong cash flow due to its cash-based business and low working capital needs. As at 30 Sep 13, OSIM had cash and cash equivalents of S$283m. 
  • Although management still maintains its profit guidance of a 15% growth in bottom line, we believe the company can exceed expectations and record a net profit of S$108.1m (+24.3% yoy) in 2013. The company is also expected to maintain a dividend payout of 6 S cents/share for 2013, providing a yield of 2.7% as of the last traded price.

Telecos Sector

Maybank Kim Eng Research, Nov 25.
INFOCOMM Development Authority (IDA)'s conditional approval of the proposed sale of OpenNet to NetLink Trust, in our view, does not have much of an impact on our calls on Singapore telcos.
IDA has approved the sale of OpenNet by its four major shareholders (SingTel holds a 30 per cent equity stake) to NetLink Trust, which is wholly owned by SingTel. SingTel has also been granted an extension to reduce its equity stake in NetLink Trust (to 25 per cent via a public offering) to April 2018 from April 2014.
To address industry concerns over preferential treatment to SingTel by OpenNet, IDA has imposed some key conditions:
(1) the need for an independent board of directors,
(2) a "monitoring" board staffed by government officials,
(3) NetLink Trust to seek IDA approval to appoint contractors, and
(4) SingTel to transfer its entire sub-contracting team to NetLink Trust.
Our view: Better but still not enough.
We take the view of StarHub, M1 and other internet service providers who are likely to view this development as a non-event.
Our largest concern lies in the four-year extension for SingTel to sell down its stake in NetLink Trust as it will prolong a dissatisfactory state of the industry.
Ideally, the monitoring board created should also be staffed by StarHub and M1 representatives.
IDA's decision to put conditions on OpenNet's shareholders' proposal to up stakes to NetLink Trust stemmed from industry concerns that OpenNet was causing delays to the fibre rollout plans for the rest of the industry and the sale would not solve the problems but could even make it worse.
StarHub and M1 have been living with this state of affairs for years now and they have evolved in their own ways of coping. For commercial buildings, for example, instead of waiting for OpenNet to complete the fibre connections, they have built their own fibre optic networks wherever it makes economic sense and they can reach separate agreements with specific building owners that are willing to allow them to run their own separate riser cables onto each floor.
However, this is obviously still not a satisfactory situation for them and any progress made on the OpenNet issue will still be icing on the cake and the bottomline is that SingTel is the one that is under official pressure, no matter how compromised.
Any improvements can only benefit StarHub and M1 in the long run. On the other hand, shareholders of SingTel hoping for a special dividend from the spin-off of NetLink Trust would be disappointed with the delay.
This latest development does not have much of an impact on our calls on Singapore telcos, which remains a BUY on StarHub and M1, and a HOLD on SingTel.
Our top pick for the sector is M1 as we think (1) its earnings growth will rev up faster than the rest of the industry in the next two years on the back of its likely ability to monetise the data front faster than its competitors, and (2) the likelihood of a special dividend.
NEUTRAL for Telcos sector
(Buy M1, buy StarHub, hold SingTel)