ANALYSTS SAY: Buy, Sell, Hold (27 Aug)

REITs – Singapore 

QE Taper And Interest Rate

Hikes – Feast Or Famine For S-REITs? S-REITs might suffer a mild correction prior to the onset of QE taper but total return and relative performance should turn positive during the QE taper. S-REITs have provided positive total returns throughout the last two interest rate upcycles. Whether S-REITs outperform the broader market depends on the magnitude and steepness of the hikes in the Fed Funds Rate. Given that the Delta variant remains a threat, the Fed is unlikely to go overboard to assert a hawkish stance. Maintain OVERWEIGHT.

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Genting Malaysia (GENM MK)

2Q21: Holding Out For Emerging Catalysts

Despite delivering washed-out results for 2Q21, GENM has slowly regained its form and we remain confident on its ability to generate positive cash flows and sail beyond COVID-19’s hurdles. With the pace of the nation’s vaccination programme accelerating, we expect solid recovery and various catalysts in 2H21, including the reopening of RWG, lush dividends and the opening of its outdoor theme park. Maintain BUY and target price of RM3.40.

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UOB KAYHIAN

LIM & TAN

IHH Healthcare (IHH MK)

2Q21: Firing On All Cylinders

IHH’s 2Q21 core profit well exceeded expectations. Non-COVID-19 patient admission was surprisingly robust while GHK achieved operational breakeven. While pandemicrelated contributions are expected to normalise, this is balanced by turnaround in GHK and Acibadem’s operations have been de-risked significantly. IHH’s valuations are attractive, with resilient yet defensive 3-year earnings (2020-23F) CAGR of 25.6%. Maintain BUY with a higher target price RM6.40.

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TIONG WOON CORP

TWC’s market cap stands at S$121.9mln and currently trades at 10x forward PE and 0.45x PB. Dividend yield stands at 0.8% and gearing is at 26.4% (vs 32.9% last year) and after adjusting for secured borrowings on their property, TWC adj. gearing stands at 1%. We continue to like TWC for its strong cash flow capabilities and reiterate that slight delays in the construction industry would be favourable to TWC given the nature of its business. TWC remains at the trough of the construction cycle and valuations remains undemanding given TWC’s current stead fundamentals and main catalyst remains in Heng Yi project P2, which we patiently await for more information. Maintain “Accumulate” at target price of S$0.84, representing 60% upside from current price.