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Expect Lacklustre Toplines In 2021; NEUTRAL


 Stay NEUTRAL, BUY DBS. Singapore (SG) banks are expected to post a 19% recovery in FY21F earnings, with ROE edging up to 8.4%. COVID-19 vaccine-induced optimism saw bank stocks rally to reduce the YTD fall to 8%, outperforming the market’s -12% YTD. The increasing availability of vaccines, we believe, will support further rotation into cyclical stocks. Still, risks from an uneven economic recovery point to a need to stick with banks with high provision buffers and robust capital. DBS is our only BUY.


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Frencken Group Ltd

Impairment loss does not affect outlook


■ Frencken has announced an S$6.2m impairment loss to be booked in FY20F earnings. The group still expects to remain profitable in FY20F.

■ The impairment loss does not affect our earnings forecast though it represents a lost long-term revenue opportunity.

■ We raise our P/E target multiple to 12x, in line with the sector average; our TP rises to S$1.39.


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Gamuda (GAM MK)

1QFY21: Property drag

Positive orderbook prospects; BUY with a higher TP Gamuda’s 1QFY21 net profit was just 18% of our FY21E; the shortfall due to a slower-than-expected pick-up in property progress billings. No interim dividend was declared to preserve cash. We lower our FY21E net profit by 16%, but raise RNAV-TP by 42sen to MYR4.22 on updating for details from its FY20 Annual Report and incorporating a higher PER peg to its engineering & construction (E&C) operations on positive orderbook replenishment prospects. Still our prefered sector pick.

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Mynews Holdings (MNHB MK)

4QFY20 results: Still in the red

Maintain SELL with unchanged TP of MYR0.57 4QFY20 results were below our/consensus earnings estimates due to higher-than-expected selling, distribution & admin expenses. The CMCO is likely to keep store footfall subdued going forward and earnings may only meaningfully recover once lockdown measures are lifted. Our SELL call, TP of MYR0.57 (based on unchanged CY21 PER of 21x) and earnings estimates are maintained pending MNHB’s results briefing today.

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LionelLim8.16Check out our compilation of Target Prices

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