| PHILLIP SECURITIES | MAYBANK KIM ENG |
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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.
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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.
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UOB KAYHIAN |
CGS CIMB |
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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.
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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.
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Check out our compilation of Target Prices