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RHB |
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Sheng Siong (SSG SP) More Grants From The Government; Keep BUY
Maintain BUY with new TP of SGD1.42 from SGD1.39, 10% upside plus c.3% yield. FY19 results were in line. 4Q19 headline number seemed weak, with PATMI down 0.8% due to a non-cash impact from SFRS16. Excluding this, 4Q19 PATMI grew 9.2% YoY to SGD19m, with FY19 PATMI rising 9.7% YoY to SGD77.4m. We expect grocery sales to remain resilient amidst the COVID-19 outbreak.
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Sembcorp Industries (SCI SP) Value After Recent Share Price Weakness; BUY
Keep BUY with new SOP-derived SGD2.33 TP from SGD2.68, 16% upside plus c.2% yield. FY19 net profit of SGD247m came in ahead of our SGD187m expectations. Excluding the one-time exceptional items, recurring FY19 net profit of SGD395m would be 17% higher YoY. We remain positive on Sembcorp Industries with expectations of its energy and urban segments underpinning performance going forward.
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| MAYBANK KIM ENG | MAYBANK KIM ENG |
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Wilmar International (WIL SP) Visibility remains limited
IPO timing & Covid-19 creates near term uncertainty WIL’s 2019 NPAT came well ahead of MKE/Street expectations supported by a strong performance in Tropical Oils, YoY improvement in Oilseeds & Grains from higher crushing margins and contributions from nonoperating items, including investment securities gains. While the Group’s food staples focus should provide it with some immunity against the Covid-19 epidemic in China, the difficulties it was facing on animal feed from ASF are unlikely to disappear near term. A prolonged Covid-19 outbreak may impact raw material sourcing, labour and supply chains. Separately, the timing of its Chinese IPO is currently ambiguous. As a result, we pref fer to maintain HOLD with new TP of SGD4.37 until better clarity arise.
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OCBC Bank (OCBC SP) Better pay out
Covid-19 uncertainty, but better dividend visibility OCBC’s 2019 earnings came marginally ahead of MKE/Street bolstered by trading income. Allowances for credit losses though came in significantly higher than our already bearish assumptions. While this was mostly from legacy O&G exposure, elevated credit costs are unlikely to abate given risks to customers from the Covid-19 epidemic and slower North Asian growth. Nevertheless, we welcome OCBC move towards progressive dividends and managing excess capital. This lowers earlier risks to dividend visibility and M&A uncertainty. We have raised our TP by 3% to SGD11.57. Maintain HOLD. We prefer UOB for stronger ASEAN exposure.
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