Investors’ Corner (Amara Holdings, Sembcorp Marine, Venture Corporation, Singapore O&G)

Amara Holdings
Price – $0.53
Target – $0.88

Amara Holdings (Amara) guided for an 89% average occupancy rate (AOR) for Amara Singapore for 8M17 slightly higher than 8M16’s 88%. Likewise, Amara Sanctuary registered an AOR of 73% which improved significantly from 60% for 8M16. According to an article in the Business Times, only 266 new hotel rooms are expected to be added in 2018 as compared to 3,174 rooms in 2017. The lower supply coupled with an estimated mid-single-digit 2018 visitor arrival growth would keep the group’s average room rate (ARR) robust. Most notably, management targets to commence operations of Amara Signature Shanghai (ASS) in 4Q17. Hence, 2018F net profit is forecasted to grow by 35% with full 12-month contribution from ASS as well as a stronger Singapore ARR. With several significant valuation upsides, Amara remains attractive trading at a P/RNAV of 0.39 times. Maintain BUY. RHB Research (9 Oct)

Sembcorp Marine
Price – $1.74
Target – $1.90

Borr Drilling is acquiring 9 rigs from Sembcorp Marine (SMM) for US$1,256m and upfront cash payment of US$502m. Delivery will be made progressively over 14 months from 4Q17 to 1Q19. The deal will result in improved liquidity to SMM’s balance sheet as net gearing falls from 133% as of 2Q17 to an estimated 76% by end 2018. Finance expense is also expected to drop 15 to 30% and provides an uplift to the group’s earnings. Following the transaction, concerns with regard to additional provisions for SMM in the downturn should be largely removed, and the stock is likely to be re-rated as it is now well-positioned for growth in the new low-oil price era. Upgrade to BUY. UOB-Kay Hian (9 Oct)

Venture Corporation
Price – $18.60
Target – $21.00

Venture Corporation (Venture) announced a historical-high quarterly performances and delivered consistent revenue growth for the last 15 quarters. We believe that the strong growth momentum is likely to continue underpinned by stronger-than-expected demand of new products in the genome sequencing space as well as growth in the networking and communications segment. Furthermore, we foresee the possibility of potential dividend upside given the group’s strong earnings growth. CEO Mr Wong purchase of Venture’s shares in the open market for a total consideration of more than $8m increasing his stake to 7.08% as of 12-Sep is another positive sign demonstrating management’s confidence in the group’s growth trajectory. Maintain BUY. DBS Vickers (6 Oct)

Singapore O&G
Price – $0.49
Target – $0.65

Singapore O&G (SOG) has entered into a commercial collaboration with KL Fertility Centre to offer new and existing patients with Assisted Reproductive Technology services such as In-Vitro Fertilisation and Intracytoplasmic Sperm Injection Procedures. The collaboration is for an initial term of 36 months and is targeted to commence in early 2018. About 15% of the couples in Singapore face infertility issues, and the number is increasing with the median age at first marriage and first birth rising. The strategic partnership completes SOG as a holistic care for women’s wellness with multidisciplinary team approach and enables the group to capture part of the value chain on consultancy, monitoring and drug prescriptions. Should pregnancy occurs, the patient could eventually return to SOG for obstetrical, aesthetic and paediatric services, thereby opening up more opportunities for future revenue growth. Maintain BUY. Phillip Securities (5 Oct)