Investors’ Corner (ISOTeam, 800 Super Holdings, GuocoLand, Health Management International)

ISOTeam
Price – $0.35
Target – $0.50

ISOTeam continues to win contracts from the public sector despite the weaker macroeconomic environment and its orderbook stood at a $95.8m high as at 18 Aug-17. The group completed the purchase of its new premises in Changi in Apr-17, and potential sale of existing office could allow the group to enjoy a one-off gain of about $3m. ISOTeam ventured into the bike sharing stint with 51% owned SG Bike launched on 24 Aug-17, which would allow it to broaden its revenue base and generate a new recurring stream of income. Meanwhile, ISOTeam had tendered and won a few projects in Myanmar leading to more revenue contribution for 2018. Underpinned by the recovering outlook for the Singapore property market as well as contributions from its Solar and Myanmar projects, we are positive on ISOTeam’s outlook ahead and expect better results going forward. Maintain BUY. RHB Research (28 Aug)

800 Super Holdings
Price – $1.18
Target – $1.53

800 Super Holdings’ FY17 net profit missed our expectations by 5.1% due to higher than expected income tax expense. Nonetheless, revenue and profit are higher by 0.3% and 2.3% respectively in contrast to listed-competitor Colex Holdings which reported 0.8% lower revenue and 17% lower profit. The final dividend of $0.03 came as a pleasant surprise considering the capital commitments for ongoing projects, and we believe that the dividend is sustainable going forward as cash flow from operations is expected to remain stable. Meanwhile, projects are on track for completion with the waste to energy plant expected to be operational by end-2017 and the sludge treatment facility is targeted for completion in 2Q18. Key catalyst to look out for is the tender for the Public Waste Collection contract for the consolidated Bedok and Pasir Ris-Tampines sectors in 3Q17, competing against incumbents SembWaste and Veolia. Upgrade to BUY. Phillip Securities (25 Aug)

GuocoLand
Price – $2.28
Target – $2.80

GuocoLand’s year-to-date share price performance of 26.7% is in line with its peers but still lags significantly behind that of City Developments’ at 38.8%. Backed by the pick-up in residential sales momentum in Singapore and China, we expect earnings to enjoy a strong boost from the development properties with Urban Oasis and Leedon Residences as the key contributors as well as potential revaluation gains in the Tanjong Pagar Centre (TPC). Two major overhangs on the stock, being the legal dispute surrounding its ownership of Beijing Dongzhimen (DZM) project and its relatively high gearing, have been addressed. Following the sale of DZM project to China Cinda Asset Management, its gearing has dropped to 0.7 times in FY16. With the asset stabilisation of TPC, we project recurring earnings to account for 20 – 30% of GuocoLand’s overall earnings forward, and raised target price to $2.80 considering that GuocoLand is trading at a deep 37% discount to its RNAV of $3.63. Maintain BUY. UOB-Kay Hian (25 Aug)

Health Management International
Price – $0.65
Target – $0.80

Health Management International has started to see more patients, reporting a healthy growth in patients’ volume by 3.7% y-o-y in 4Q17. Outpatient bill size grew 7.8% while the inpatient bill size remained flat. Due to the full consolidation of newly acquired minority stakes, FY17 core earnings increased by 40%. Mahkota will continue to develop its centres of excellence and is now the most comprehensive cancer centre south of Kuala Lumpur with the addition of new equipment. It targets to increase bed capacity to 300 beds in FY18, and more flight routes including direct flights to Jakarta, Guangzhou and Vietnam for the Malacca airport is yet another positive development for the Malacca-based medical centre. Meanwhile, Regency has also firmed up its extension plan to increase beds capacity to 380 with capacity to expand to 500 scheduled to commence in FY18. Maintain BUY. Maybank Kim Eng (25 Aug)