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China Aviation Oil (CAO SP) Eventual Recovery, Compelling Valuation; BUY
BUY, new SGD1.20 TP from SGD1.26, 18% upside with 2.5% FY21 yield. China Aviation Oil’s 1H21 earnings fell below estimates, amidst lower sales volumes and GPM from its ex-China jet fuel trading business. We cut FY21-23F earnings by 3-12%, as the recent spike in COVID-19 cases in China would cap further improvements in domestic aviation traffic, while the eventual recovery in international aviation traffic will now be only visible in 2022. Valuations remain compelling – the stock is trading at 0.3x 2022F PEG, and at 4.7x 2022F P/E on an ex-cash basis.
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UOB KAYHIAN |
UOB KAYHIAN |
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STRATEGY – SINGAPORE Alpha Picks: Adding Genting Singapore, Removing GHY
For Jul 21, our Alpha Picks performance was flat vs STI on both price- and market capweighted basis, up 1.3% and 1.5% respectively vs the STI’s 1.2% mom increase. In July, a broad range of stocks did well including SGX (+6.3% mom), UMS (+5.9% mom) and Ascendas REIT (+5.8% mom). Stocks that underperformed include GHY (-11.1% mom) as well as Hong Leong Asia (-5.8% mom) and Innotek (-5.8% mom). For Aug 21, we add Genting Singapore and remove GHY.
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Singapore Medical Group (SMG SP) 1H21: Record Revenue Amid Challenges; Poised For Growth
SMG reported a record 1H21 revenue while earnings continued to be impressive at S$7.2m (+108% yoy), in line with expectations. Aesthetics and diagnostics services continue to spur earnings even with challenges faced from Phase 2 (Heightened Alert) as well as COVID-19 restrictions for overseas businesses in Indonesia and Vietnam. Overall, demand proved to be resilient and we look forward to the return of medical tourists. Maintain BUY with an unchanged PE-based target price of S$0.48
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