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UOB KAYHIAN |
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Penguin Int'l Ltd On slower throttle, buoyed by balance sheet
■ Lower crude oil prices and Covid-19 led to our conservative forecasts for Penguin Int’l (PBS). We cut our FY20-22F EPS by 14%-37%. ■ We still like the company for its padded net cash position (FY21F: 41% of current share price) and diversified product portfolio. ■ We think PBS is in a better position vs. 2014-2016. Reiterate Add, with a lower TP of S$0.55, now based on 0.7x CY21F EPS (2009-2019 average).
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Singapore Airlines (SIA SP) Pax Load Factor Under 10%, Forward Bookings Are Bleak; Downgrade To SELL
We recommend taking profit on SIA. While the general expectation is for traffic to recover only in FY22, there is significant uncertainty over the extent of decline in traffic and load factors, and consequently the extent of cash burn. We raise FY21 yoy traffic decline estimate from 45% to 58%. In addition, unless SIA defers some of its aircraft deliveries, it is likely to require further funding in FY22. We lower our fair value P/B to 0.8x from 0.9x, or target price of S$3.80. Downgrade to SELL.
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RHB |
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Banks Prolonged NIM Squeeze From FFR Weakness
Remain NEUTRAL on a prolonged low interest rate period. The US Federal Reserve guided last week for the federal fund rate (FFR) to remain near zero till 2022. This translates into the SIBOR staying soft – banks’ NIMs are expected to be narrow in FY20-21. Asset quality remains a key negative for banks’ earnings, notwithstanding Singapore moving into a Phase 2 re-opening later this week. Within the sector, we prefer OverseaChinese Banking Corp (OCBC) the most, as it has a stronger capital ratio and high exposure to a likely faster recovering Greater China.
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Check out our compilation of Target Prices
