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BRC Asia Proposed entry of a solid substantial shareholder SINGAPORE | INDUSTRIAL | UPDATE
BRC Asia has proposed to issue 31,015,000 new shares (12.7% of outstanding) to Hong Leong Asia Investments at S$1.48 a share in a private placement to raise S$45.9mn. Concurrently, Hong Leong Asia Investments will purchase from several vendors an additional 15mn shares at the same price. This is conditional on the placement’s success. The proposed placement will strengthen the group’s balance sheet as it navigates out of the current crisis, in our view. Net gearing would have improved from 112% to 83% had the transaction been completed last quarter. Maintain BUY and target price of S$1.79. No change to our forecasts pending regulatory and shareholder approval, which we expect to be completed in about six weeks. Our TP remains based on 11x FY22e P/E, a 15% discount to its 10-year average on account of the uncertain environment. Catalysts expected from higher foreign-worker inflows to Singapore.
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Koda Ltd Waiting for resumption SINGAPORE | CONSUMER (FURNITURE) | FY21 RESULTS
2H21 results beat, with FY21 revenue and PATMI at 116%/107% of our forecasts. The outperformance came from higher-than-expected manufacturing sales. 2H21 revenue grew 65% YoY while PATMI jumped 20x, from higher export sales, increased contributions from retail and distribution and improved gross margins. Maintain BUY with lower TP of S$1.10, down from S$1.32 as we roll over our 7x ex-cash P/E to FY22e. This is at the higher end of its historical 5-year ex-cash P/E. We lower FY22e PATMI by 29% to US$7.0mn. FY22e revenue estimate is largely unchanged but we cut gross margins from 32.0% to 29.5% for Covid-19 production disruptions at Koda’s plants in Vietnam and Malaysia. Catalysts still expected from higher exports to US and increase in production capacity.
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PHILLIP SECURITIES |
KGI FRASER |
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NetLink NBN Trust Fibre connections modestly weaker SINGAPORE | TELECOMMUNICATIONS| 1Q22 UPDATE 30 August 2021
1Q22 revenue and EBITDA within expectations, at 25%/19% of our FY22e forecasts. Residential fibre connections increased by 2.3k this quarter, below our annual estimate of 25k. We expect a rebound in the latter part of FY22 with renewed home construction. No change in our estimates. ACCUMULATE rating and DCF TP of S$1.03 (WACC 5.9%) unchanged. Yields of 5.2% supported by monthly recurring revenue from more than 2mn fibre connections in homes and businesses. Regulatory review of fibre rates expected in mid2022, likely implemented at end-2022.
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Geo Energy Resources Limited Cash machine
• GEO is set to have a record year ahead as coal prices remain resilient. ICI 4 prices (4,200 kcal) are at more than 10-year highs. While we expect coal prices to soften in 2H2021, dynamics favour coal miners given the buoyant demand from India and China. On the other side of the equation, there’s less risk of an oversupply-related correction for coal markets as ESG pressure has pushed capital toward clean energy (e.g., solar, electric vehicles, wind farms), thus limiting rapid coal supply growth.
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