Top Rated SGX Stocks of the day

THE accompanying SGX Stocks saw new advancements that may influence exchanging of their offers on Tuesday:

Sembcorp Marine Limited (SembMarine): SembMarine's entirely claimed Brazilian backup has won a US$145 million contract. In an announcement to the Singapore Exchange on Monday, the firm said it anticipates that a positive commitment will its profit from the agreement, excepting any unanticipated conditions. SembMarine's offers edged up 0.64 for each penny to close at S$1.575. CIMB Research looked after its "include" call with an objective cost of S$1.87. "Contract wins and stripping of deferred apparatuses could be a key impetus," it said.

Hyflux Limited: Mainboard-recorded Hyflux on Monday said SEPCOIII Electric Power Construction Corporation has been requested to pay its backup, Hydrochem, US$16.1 million after an intervention question. The request was issued by the tribunal on Aug 31. Hyflux's offers shut at S$0.485 on Monday.

Cache Logistics Trust: The ex-rights exchanging for Cache Logistics Trust's (CACHE) rights issue started last Fri and our rights reasonable esteem gauge is S$0.78. Our reasonable incentive thusly suggests a characteristic estimation of S$0.148 for the rights qualifications, given the rights issue cost of S$0.632 per unit. The beginning of exchanging of rights privileges is booked to be 9am on 15 Sept, Fri.

Golden Agri Resources: The Malaysian Palm Oil Board discharged information yesterday that demonstrated an 8.8% MoM ascend in Malaysia's palm oil stocks, a 0.9% decrease in palm oil generation while sends out were up 6.4%. Review that our view on CPO value viewpoint had been bearish, given the higher CPO creation expected in 2017, maintained low oil costs, and sound worldwide option oilseed generation weighing on general oilseed costs.

As of late, OCBC Treasury Research updated their CPO viewpoint from MYR2,250 to MYR2,600/MT by year-end, chiefly because of the fall in raw petroleum generation levels particularly found in Malaysia for the long stretch of Jun, and general interest for palm oil was esteemed solid in the initial seven months of 2017.

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SGX Shares M1 Ltd OCBC Research of 11 Sept 2017

Our Stock Market Analysis Parameter

• Mobile market getting crowded
• Declining dividend yields
• Upgrade to HOLD on valuation grounds

Exposure to Singapore mobile remains significant 

                                

1. In recent weeks, competition in the Singapore mobile market has heated up further as M1 Ltd (M1) and Starhub launched new plans that offer unlimited data for consumers, in different ways.
2. Based on M1’s 1H17 results, ~88% of its revenue remains exposed to the Singapore mobile market, which we define as the sum of mobile service revenue, handset sales and international call services revenue. The remaining 12% of its revenue in 1H17 was derived from the fixed services segment. 
3. While M1 has highlighted it will focus on investing in digital solutions as well as develop new ICT and cloud-based solutions, we believe these new revenue streams will not become material enough in the near to medium term to offset the declining mobile earnings. Hence, with the intensifying competition and given M1’s significant exposure to the Singapore mobile market, we expect the outlook for M1 to remain challenging until its enterprise segment is substantial enough to offset the expected declining earnings.

Dividend yield to fall alongside declining earnings ahead 

• The result of heightened competition as the mobile market gets more crowded is likely exerting greater pressure on ARPU, which is already on a downward trend. 

• We believe with the impending entry of TPG and MyRepublic, M1 will likely continue to engage in aggressive marketing campaigns and promotional activities to try to gain or at least retain market share by locking in customers on new contracts. Hence, we are forecasting for M1’s post-paid ARPU to decline ~20% over the next five years.

• Consequently, as we update our assumptions, our FV decreases from S$1.75 to S$1.65. However, given the steep decline of more than 14% since its 2Q17 announcement, we upgrade M1 from SELL to HOLD on valuation grounds.

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