PHILLIP SECURITIES |
MAYBANK KIM ENG |
Thai Beverage PLC Spirits and property gains to the rescue
SINGAPORE | CONSUMER | 3Q19 RESULTS Revenue was below our forecast. Net profit beat our estimates due to strong associate contribution. Frasers Property (FPL) reported significant property gains this quarter. Beer earnings dropped almost 40% as Sabeco volumes were down 2.5% YoY in 3Q19 due to destocking of brand relaunch. Higher margin brown spirits demand in Thailand recovered from last year post excise duty. Maintain NEUTRAL. We keep our SOTP-derived TP to S$0.83. Our earnings forecast is unchanged. We lowered revenues and incorporated the severance provisions but raised our associate earnings. Outlook for Thai Beverage earnings in FY20e will be highly dependent on the passing of agriculture support prices by the government. Excluding these measures, our expectations are for lacklustre earnings growth in FY20e.
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Netlink NBN Trust (NETLINK SP) Safety in numbers
Post NDR feedback - Investment thesis intact. BUY. We hosted Netlink management on a Singapore NDR and came away confident in the security of operating cashflows and DPU for the short- to long-term. With a virtual residential-fibre monopoly and guaranteed regulated returns, Netlink provides a haven amid the current industry turbulence. Maintain BUY with risks to our outlook from any negative revisions to its regulatory regime.
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CGS CIMB |
UOB KAYHIAN |
Tech Manufacturing Services 3Q19F will remain challenging
■ The trade war between China and the US has impacted 2Q19 results and continues to be the number one concern for companies under our coverage. ■ We see Frencken as best positioned to post double-digit yoy earnings growth in 3Q19F, but an industrial automation slowdown in FY20F is a concern. ■ Sunningdale Tech could still be in for a tough time in 2H19F as it manages its cost structure and remains exposed to the weak automotive sector in China.
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Small/Mid Caps Results Round-up
2Q19: More Misses Than Beats; Stay Selective On Deep Value The majority (60%) of the companies under our small/mid-cap coverage met expectations this earnings season while 13% surprised on the upside; misses were higher compared to beats at 27% due to a weaker performance from the manufacturing and consumer sectors. We recommend investors selectively accumulate deep-value names (eg low ex-cash P/E, high dividend yield) with a good track record to withstand this uncertain economic environment. Our top picks are Koufu, Fu Yu and BRC Asia.
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