| UOB KAYHIAN |
UOB KAYHIAN |
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SATS (SATS SP) Earnings Recovery To Gain Traction In 2024; Red Sea Crisis To Benefit Air Cargo
We expect SATS’ earnings recovery to gain traction in 2024, driven by the continued air traffic recovery and growth in global air cargo demand. The ongoing Red Sea crisis, which has led to more time-sensitive cargo being diverted from ocean freight to air freight, should also benefit SATS given WFS’ strong presence in Europe. We expect SATS to turn in a decent qoq earnings improvement in 3QFY24, driven by a business recovery as well as strong seasonality. Maintain BUY. Target: S$3.22.
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XL Axiata (EXCL IJ) Data Traffic On New Year’s Eve 90% Higher Than Normal Days; Maintain BUY
EXCL’s data traffic on 31 Dec 23 (New Year’s Eve) was 90% higher than normal days’ average. This is due to seasonally stronger demand for data service during the festive season. Compared with normal days’ average traffic, EXCL’s data traffic increase was the strongest among Indonesian telcos as it reached 15% between 24 Dec 23 and 2 Jan 24. This is higher than the data traffic increase of Telkomsel (14%) and ISAT (9% as of 1 Jan 24). Maintain BUY. Target price: Rp2,500.
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MAYBANK KIM ENG |
MAYBANK KIM ENG |
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Singapore Strategy Time to Cherry Pick
Be selective in 2024E. BUY themes and laggards Four major themes - corporate restructurings, sustainability inflows, regional M&A and productivity boost from new technologies - are converging. These should catalyse Singapore’s medium-term earnings higher. However in 2024E, the pace is set to slow as benefits from interest rate hikes and early re-opening retreat. Risks are on the upside, though, particularly from a new semicon inventory cycle, falling rates, and fresh orders for O&M and alternative energy. Corporate balance sheets are strong giving significant runway for Singapore to consolidate its regional hub status. Top picks: CD, CICT, CLAR, DBS, Dyna-Mac, FRKN, GENS, LREIT, ST, and Venture.
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Malaysia Consumer Adopting mindful spending habits
NEUTRAL sector weight unchanged Weak consumer sentiment could prevail throughout 2024 as consumers are forced to prioritize essential spending over discretionary ones, given elevated stapled F&B costs and rising household expenditure. Our top BUY pick for the sector is Farm Fresh (FFB MK, BUY, TP: MYR1.65) with expectation for strong topline growth on resilient product demand along with margin expansion from a steep decline in its whole milk powder ASPs.
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| UOB KAYHIAN | LIM & TAN |
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Xtep International Holdings (1368 HK) Sales Target Met And Inventories Normalised; Aiming For Double-digit Revenue Growth In 2024
The core Xtep brand recorded >30% retail sell-through growth in 4Q23, bringing the fullyear sell-through growth to >20%, meeting the company’s target. Although discounts deepened to about 30% mainly due to inventory clearance, inventory turnover returned to a healthy level. Management projects double-digit revenue growth in 2024. Maintain BUY but cut target price by 16% to HK$8.00 to reflect the slower growth in 2023 and industry headwinds of destocking and rising competition.
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(Keppel Ltd / formerly Keppel Corp) ($6.95, up 1 cent) reported that GlobalFoundries (NASDAQ: GFS) (GF) and Keppel Ltd’s Infrastructure Division (Keppel) announced the signing of a multiyear power purchase agreement (PPA) for the provision of electricity at GF’s Singapore site, expected to commence on 1 May 2024. The multi-year agreement will see Keppel provide 150 to 180 MW of electricity each year to power GF’s Singapore operations. This agreement will facilitate procurement of GF’s power supply as its Singapore campus continues to ramp production following the launch of its latest Singapore Expansion facility in September 2023. Keppel Ltd’s market cap stands at S$12.4bln and currently trades at 9.5x forward PE and 1.15x PB, with a dividend yield of 4.7%. The consensus target price stands at S$7.61, representing an 8% upside from the current share price. We continue to like Keppel’s green initiatives and it’s move towards being a global organization, which would help to minimize country/ region risk going forward. We now have an Accumulate on Weakness rating on Keppel after it risen c.4% since our last recommendation and given around 8% potential upside to consensus target price of $7.52. |
