Brokers' take

Singapore Reits | Overweight

CIMB Research, Aug 15

Despite the rally, valuations are not over-stretched. S-Reits are trading at mean. In terms of yield spread, it is also one of the cheapest vs other key Reit markets. Industrials replace office as our most preferred sub-sector.

For 2Q16, industrials and retail were the most resilient. With the exception of Suntec Reit, the retail Reits continued to push through positive rental reversions.

Office starting to feel negative retail reversions. RevPAR declines for hotels reaccelerated. Preferred picks are now Keppel DC Reit ("Add", TP: S$1.29), Mapletree Commercial Trust ("Add", TP: S$1.62) and Mapletree Industrial Trust ("Add", TP: S$1.90).

Mermaid Maritime | Hold (Upgrade)

Target price: S$0.09

Aug 16 close: S$0.093

DBS Group Research, Aug 16

While persistently low oil prices cloud the outlook for all offshore services players, we think Mermaid's relatively stress-free balance sheet with only 0.04 times net gearing, ability to profitably utilise key subsea vessels (Endurer, Challenger) and recent cost-cutting initiatives provide some comfort, and current 0.3 times P/BV valuations look fair.

The key risk remains the ability o take delivery of the three newbuild vessels on order, which have had their delivery dates deferred to end-2016/mid-2017, as Mermaid will need to secure financing for the US$400 million remaining capex commitments amid challenging market conditions.

We upgrade the stock to "hold" as the share price has hit our TP.

SIIC Environment Holdings | Buy

Target price: S$1.26

Aug 16 close: S$0.60

RHB Securities, Aug 16

We hosted SIIC for a post-results non-deal roadshow. Below are the key takeaways:

1. Its aggressive growth story remains intact over the next five years; SIIC aims to be the industry leader by 2020.

2. Waste-to-energy and sludge are the next legs of growth. It has begun investing in these two areas as it thinks growth may taper in the wastewater segment after 2020.

3. Concerns on accounting treatment and collection of accounts receivables have been dismissed. We believe these have deteriorated the valuations of the sector.

4. Its state-owned enterprise background and nationwide scale enable it to better withstand competitive pressures.

Compiled by Andrea Soh

Disclaimer: All analyses, recommendations and other information herein are published for general information. Readers should not rely solely on the information published and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.