Brokers' take

Aviation sector | Underweight

OCBC Investment Research, April 13

THE recently surfaced safety concerns over Thailand's aviation industry resulted from issues found through the audit conducted by United Nation's International Civil Aviation Organisation (ICAO). The unsatisfactory audit result triggered responses, including bans on new charter flights and additional ramp inspections by countries in the region.

We believe the impact on Singapore-based carriers from the bans of approving charter flights and additional flights to the three countries is likely to be short-term.

Singapore Airlines (SIA) will face negative impact through its joint-venture NokScoot; Tigerair is likely to see little positive impact from limited route exposure.

We therefore keep our rating and fair value unchanged for both SIA (Hold; FV:S$11.59) and Tigerair (Sell; FV:S$0.29) and continue to hold an "Underweight" rating on the aviation sector, as the outlook remains uncertain for the industry for its overcapacity reason, as well as expected lower demand for air travel.

GuocoLeisure | Buy

April 13 close: S$0.965

Target price: S$1.13

UOB Kay Hian, April 13

Buy with a target price of S$1.13, placing stops at S$0.87. The stock looks poised to break out of the S$0.90-to-S$0.97 consolidation range and appears to have formed a higher low with reference to Dec 17, 2014.

Any retracement for now should ideally not be below S$0.925, as indicators are suggesting bullish momentum, with the 21-day Stochastics indicator having moved out of the "oversold" region and the Moving Average Convergence Divergence (MACD) indicator showing signs of moving towards its centreline after forming a bullish crossover.

China Everbright Water | Buy

April 13 close: S$1.04

Target price: S$1.17

Maybank Kim Eng, April 13

Water plants in Suzhou and Jinan impressed us during a recent visit. Good plant management, strong market positioning in Shandong, China. With the adoption of public-private partnerships, the company believes more water assets will be released by local governments.

This presents very substantial market opportunities for big state-owned enterprises such as China Everbright Water. The mergers-and-acquisitions flurry in China's water sector to continue. Reiterate BUY.

Cut target price to S$1.17 from S$1.26 after our financial remodelling. Still at 30 times FY2015 price earnings ratio. Catalysts from more aggressive asset purchasing.

Compiled by Claire Huang

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.