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First Resources (FR SP)
1Q21: Looking Forward To 2H21
FR’s 1Q21 net profit came in significantly lower yoy and qoq. This does not come as a surprise as FR had forward sold a significant volume of its 1H21 production earlier at lower ASP and yet still needs to pay a higher export duty and levy. However, 2H21 should come in significantly better on higher production and more reflective ASP. We also expect further potential earnings upside of 12%, if the Indonesian government revises the export levy downward. Maintain BUY. Target price: S$1.65.
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Thai Beverage
Aided by prudent cost management
• Total sales volume fell 8.4% YoY
• An interim dividend of 0.15 Baht per share (+50% YoY) was declared
• Undemanding valuation
Investment thesis
Thai Beverage PLC’s (ThaiBev) 1HFY21 results came in broadly within our expectations. Its revenue fell 4.3% YoY to THB 131.3b in 1HFY21 due to lower sales from all key business segments. Net profit, however, increased by 8.7% YoY to THB 16.1b while PATMI was up 7.6% YoY
to THB 14.4b in 1HFY21, thanks to prudent cost controls and absence of nonrecurring costs and deferred tax utilization related to beer business restructuring in 1HFY20. An interim dividend of 0.15 Baht per share was
declared as compared to 0.10 Baht in 1HFY20. Alcohol beverage business remained more resilient due to its
off-premises consumption nature while the Food business was more impacted by Covid-19. We continue to like ThaiBev for its resilient alcoholic beverage business, strong product portfolio, distribution network and cheap valuation. With the recovery of the economy and rollout of vaccines, ThaiBev could benefit from the recovery of consumption, especially from the on-premises consumptions. We maintain our fair value estimate of SGD0.91.
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Weekly S-REITS Tracker
Key Takeaways
• The S-REITs sector has been hit with a double whammy, with new restrictive
Covid-19 measures in Singapore following up on increasing concerns over inflationary pressures. While we had previously pitched for S-REITs primed as recovery/reopening plays, these retail and hospitality REITs would see a temporary setback, and investors are likely to seek shelter in REITs exposed to the industrial/logistics/data centre sub-sectors in the near-term. We like
Ascendas REIT (AREIT SP) [BUY; FV: SGD3.84], Frasers Logistics & Commercial
Trust (FLT SP) [BUY; FV: SGD1.62], Keppel DC REIT (KDCREIT SP) [BUY; FV: SGD3.32] and Mapletree Logistics Trust (MLT SP) [BUY; FV: SGD2.10] within this group, but would take advantage of share price weakness in Ascott Residence Trust [BUY; FV: SGD1.22], CapitaLand Integrated Commercial Trust (CICT SP) [BUY; FV: SGD2.51], Frasers Centrepoint Trust (FCT SP) [BUY; FV: SGD2.78] and Mapletree North Asia Commercial Trust (MAGIC SP) [BUY; FV: SGD1.18] as opportunities to accumulate, given our expectations that
the decisive actions taken by the Singapore government would help to contain the spread of the virus. (17 May)
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REIT │ Overweight
Opportunity to bargain hunt?
- We remain positive on SREITs given their robust fundamentals and growth outlook and see any weakness as an opportunity to accumulate SREITs at attractive prices. We expect SREITs’ share price performance to be underpinned by DPU growth in FY21F and inorganic growth potential via strong balance sheets. While near-term performance of re-opening plays could be dampened, we continue to like the selective industrial sub-sectors. Reiterate Overweight; our top picks are AREIT, FLCT and FCT. Key risks include sharper-than-projected interest rate hikes and slower-than-expected global economic recovery.
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Check out our compilation of Target Prices