| UOB KAYHIAN | UOB KAYHIAN |
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SATS (SATS SP) 2HFY21: Sequential Improvement In Earnings, But FY22 Would Be Highly Challenging
SATS’ sequential improvement in earnings and strong cash generation are key positives, but the latter was mainly due to government grants, excluding which fullyear losses would have widened. Going into FY22, we estimate that grants could decline by 60% yoy. While investors are clearly looking beyond FY22, we are concerned about margins on inflight meals as well as inflationary cost pressures. Maintain HOLD. Target price: S$4.09.
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Singapore Telecommunications (ST SP) FY21: Missed Expectations; Strategic Reset To Bridge Valuation Gap
Singtel delivered 2HFY21 core earnings of S$896m, improving 7% from 1HFY21 but down 22% yoy. FY21 core earnings of S$1.7b accounts for 92% of our full-year estimates, slightly missing expectations. Singtel has guided a dividend policy of 60- 80% core earnings payout in the near term to conserve cash for future growth. As such, we trim our dividend forecast to 10.0/11.25/12.5 S cents for FY22-24, translating to 4-5% dividend yield. Maintain BUY and a target price of S$2.84.
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UOB KAYHIAN |
MAYBANK KIM ENG |
Sembcorp Industries (SCI SP) From Brown To Green – A Long-term Strategic Transformation
SCI’s Investor Day profiled a long-expected move towards a greener future, focusing its business growth on renewable energy and sustainable urban development as well as a pledge to deliver net zero carbon emissions by 2050. While the results will take time, we view SCI’s move positively and it could lead to the market applying an “ESG premium” to the stock. Maintain BUY with a higher target price of S$2.59.
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Petronas Chemicals (PCHEM MK) ASP softened since Apr 21
Earnings may peak in 2Q21; D/G to HOLD 1Q21 results were above expectations. ASPs has peaked in Mar 21 and softened since Apr 21. However, the average ASP in QTD-2Q21 is still slightly higher than that of 1Q21. As such, we think earnings may remain strong in 2Q21 but could soften in 2H21 on higher supply. Our FY21 EPS is raised by 21% as we raise ASP by 4%, but maintain our FY22-23E. Our TP of MYR8.25 is retained as it is based on unchanged 9x FY22E EV/EBITDA (10- year mean). D/G to HOLD in view of the softening ASPs.
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