|PHILLIP SECURITIES||MAYBANK KIM ENG|
FIRST SPONSOR GROUP LIMITED
Your financier, developer and landlord SINGAPORE | REAL ESTATE | INITIATION
Unrecognised property development revenue of S$586mn with another S$1.95bn worth of gross development value (GDV) to be unlocked, equivalent to 5 years of sales.
Property financing loan book grew at 19% CAGR in the past 5 years. These securitised loans offer recurring income at low to mid-teens returns. We are estimating loan book growth of around 8% for FY20e and FY21e.
Initiate coverage with BUY and target price of S$1.65.
United Overseas Bank (UOB SP)
Work in progress
Some catching up to do on Green banking strategy
As a bank with a wide ASEAN footprint, UOB is exposed to multiple ESG risks including contagion from customers. Additionally, as a group with a large SME customer base, UOB is particularly exposed to social risks in terms of balancing shareholder returns and supporting small business owners in a backdrop of COVID-19. Its ESG financing portfolio and certain diversity metrics lag Singapore banking peers. Nevertheless, we believe UOBs ESG risks are typical for a D-SIB with a regional presence. Near term asset quality risks and weak operating conditions lowers earnings visibility. Maintain HOLD. We prefer DBS for North Asia growth, client mix.
Looking North For Opportunities
Data coming out of China in the past few weeks has shown that the economy is experiencing a rebound post-COVID-19 slowdown. Importantly, this rebound is ahead of other countries, as seen most clearly in the PMI numbers vs that in Singapore and other developed markets. For Singapore-listed China economic-rebound plays, we highlight Sasseur REIT, Yangzijiang, Wilmar and Fu Yu as are beneficiaries, given that >50% of their revenue is from China.
SBS Transit Ltd
Time to hop on
■ We are the first to initiate on SBUS, with an Add rating and TP of S$3.40. We believe market hasn’t priced in its recovery scenario and potential catalysts.
■ We expect public transport ridership to return to c.90% of pre-Covid levels by FY21F, which could drive net profit recovery (+35% yoy) for the year.
■ Compared to ComfortDelgro, SBUS offers direct exposure to potential catalysts such as bus package tender wins and rail financing policy reform.
Check out our compilation of Target Prices