ANALYSTS SAY: Buy, Sell, Hold (9 Apr '21)

SIA Engineering

Switch to this for border reopening

■ The systematic vaccine roll-out plan, low in-community cases and pent-up demand for travel could see orderly opening of Changi airport by Sep 21.

■ The worst could be over for SIE as we forecast it to turn profitable in FY3/22F with line maintenance revenue at c.60% of pre-Covid-19 levels.

■ SIE (trades at -1.5 s.d. from mean) is an alternative to SIA (trades at mean valuations) on border reopening theme. Upgrade to Add with TP at S$2.85.

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Sunpower Group (SPWG SP)

2021 To Be Year Of Transformation

Following the record PATMI achieved in 2020, 2021 will be a year of transformation for Sunpower. In the midst of disposing of its order-driven M&S segment, Sunpower’s focus will turn towards achieving scale as an industrial steam-power producer in China. With enhanced cash flow generation ability and long-term revenue visibility, valuations should improve going forward, in our view. Re-iterate BUY with a slightly higher target price of S$1.11.

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OCBC

UOB KAYHIAN

Manulife US REIT

Beneficiary of recovery of US
economy

• US office downturn is likely to stabilise in 2021
• Healthy portfolio occupancy
• Limited new supply in MUST’s cities
Investment thesis

Despite a soft office market in the US, MUST’s portfolio occupancy remained healthy at 93.4% which is above
the US Class A average of 84% in 4Q20. Trophy and Class A buildings remained more resilient than Class B properties, benefiting from the flight to quality by tenants. We continue to like MUST’s resilient portfolio,
quality tenants, stable income streams from built-in escalations and minimal lease expiry profile (5.8% of leases by GRI) in 2021 which could limit downside risk and help MUST ride over the market turmoil. With the fast rollout of vaccines in the US, MUST is poised to benefit from the gradual reopening and recovery of economy.
We raise our risk-free rate to 1.9% to factor in our bank’s latest 12-month projection for the 10-year US Treasury yield. After adjustments, our fair value estimate
decreases slightly from USD0.83 to USD0.82.

Building Materials – Malaysia

2021 Outlook

The cement and steel segments are on track for recovery in 2021. For cement, utilisation rates have improved post-MCO and we expect bulk cement ASPs to rise from RM200/mt to RM220/mt, driven by economic reopening. The steel segment has also seen stronger ASPs supported by a commodities supercycle, coupled with stronger demand from China amid the softer local market. Maintain MARKET WEIGHT on the sector but OVERWEIGHT the cement segment. Top pick is Hume.

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