Brokers' take

Japfa Ltd | Buy

July 30 close: S$0.35

Target price: S$0.46

DBS Group Research, July 30

STRIPPING out changes in fair value of biological assets, Japfa's Q2 2015 core net profit came in at US$14.3 million, which translates into H1 2015 core net income of US$15.9 million, 45 per cent of our full year estimates. Excluding foreign exchange translation losses, Japfa would have achieved 55 per cent of our full year target.

Rating upgraded to "buy". We believe the recent sell-off is excessive, with market value deeply below book and single-digit forward price to earnings - despite decent contributions from Animal Feed, Animal Protein outside Indonesia and China Dairy.

Starhill Global Reit | Hold

July 30 close: S$0.855

Target price: S$0.90

CIMB Research, July 29

THE 18-month 2014 distribution per unit (DPU) rose 3.2 per cent year on year, driven by the acquisition of Myer Centre Adelaide (MCA) in May 2015 and strong Singapore performance, partially offset by lower contributions from China and net foreign currency movements.

Singapore assets are holding up in terms of rents and occupancies, but the overseas operations are hit by negative foreign exchange movements.

Starhill Global Reit has performed well, with its yield spread against the retail Singapore Reits average narrowing from 80 basis points in Feb 2015 to 30 basis points.

As such, we downgrade the stock from "add" to "hold" as we believe near-term outlook could be clouded by foreign exchange woes.

We lower our DPU estimates and dividend discount model-based target price as we revise our foreign exchange forecasts.

MTQ Corp | Neutral

July 30 close: S$0.63

Target price: S$0.69

RHB Research Institute Singapore, July 29

MTQ swung into a surprise S$2.3 million loss in Q1 2016 as oilfield engineering operations in Singapore weakened.

Maintain "neutral", with a S$0.69 target price based on 0.9 times FY 2016 forecast price to book value.

Activity was more resilient for the engine systems division and at Neptune in Australia, but their revenue contributions were diminished by a weaker Australian dollar.

Management was candid about the difficult operating environment.

Key risks continue to be lower revenues and operating margins.

Compiled by Cai Haoxiang

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