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HRnetGroup Limited

Hiring season around the corner


■ Twin engines of flexible staffing and permanent placements are on track for recovery; management is cautiously optimistic on the FY21F outlook.

■ We raise FY21F-23F permanent placement (GPM: c.100%) volume expectations by c.3-12% on potential labour market recovery.

■ Reiterate Add, with a higher TP of S$0.82. HRNET had net cash of S$332m (zero debt) as at end-Dec 20 and a 3.9% FY21F dividend yield.


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Keppel Corporation



■ Pursuant to KrisEnergy’s filing of a winding up petition, KEP will book a loss of S$318m in respect of its exposures to KrisEnergy, based on recoverability.

■ As a guarantor via a bilateral contract with DBS Bank, KEP is also liable to pay on demand the revolving credit facility of S$251m.

■ The payment is likely to be covered by asset recycling. We also estimate c.S$309m of gains to offset the loss. Reiterate Add and TP of S$6.40.

■ This could mark the last vestige of ‘legacy’ issue and remove the overhang on KEP as it has been plagued by KrisEnergy’s weak performance.


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Banking – Malaysia

Solid 1Q21 Performance, Recovery Underway


The sector delivered a solid pre-provision operating profit growth of 16.3% yoy in 1Q21 (4Q20: 10.6% yoy). Despite the reimplementation of MCO2.0, the level of targeted assistance continued to improve qoq in 1Q21. We are maintaining our view that credit cost will continue to improve in 2021 vs 2020 despite the recent lockdown and high number of COVID-19 cases. Valuations also remain attractive at -1SD to historical mean P/B. Maintain OVERWEIGHT. CIMB is our top sector pick.


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Telecom Sector

Three reasons for sector consolidation


• We consider three reasons for potential consolidation in mobile sector in 2022 or earlier

• Mobile service revenue is likely to improve in 2H21F after a disappointing 1Q21

• Prefer Singtel for annual earnings growth of 13% over FY21-23F and 3.6% yield. Upgrade StarHub to BUY for 4.7% yield coupled with earnings recovery and sector consolidation in 2022


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