ANALYSTS SAY: Buy, Sell, Hold (18 Apr)

UOB KAYHIAN

Sembcorp Industries (SCI SP)
Busy Adding To Its Renewables Portfolio

Since the announcement of its intention to move from brown to green energy, SCI has been very active on the business development front with over S$1b worth of deals done in China alone. Apart from China, the company has also signed up to another six renewables deals in Asia as well as in the UK, with likely more to come. SCI remains a key blue-chip holding in any Singapore portfolio in our view. Maintain BUY. Increase target price to S$3.59 (previously S$2.95).

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Suntec REIT (SUN SP)
Upside From Reopening And Redevelopment Projects

Suntec City Office has secured tenants relocating their regional HQs from Hong Kong to Singapore. Suntec City Mall benefits from the return of office crowds in 1H22 and the return of tourists in 2H22. We have factored in capital distribution of the divestment gain from 9 Penang Road at S$20m each in 2022 and 2023. SUN provides 2022 distribution yield of 5.5% and trades at a discount of 15% to NAV per unit of S$2.11.
ESR Cayman was installed as the new sponsor. Maintain BUY. Target price: S$1.88.

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MAYBANK KIM ENG

MAYBANK KIM ENG

Singapore Banks
1Q22: What to expect

Trading could disappoint. Core-businesses delivering DBS, OCBC and UOB are set to report their 1Q22 trading update on 29 April.
We think a critical downside risk could be weak trading income and markto-market losses on investment securities given the substantial macrovolatility during the quarter. This could heighten earnings disappointment risks. On the other hand, we expect core-businesses to show resilience, especially loan growth and improving margins. From a timing perspective,
a bulk of delivery could be skewed towards 2H22, as loan re-pricing gets reflected and customer investments accelerate from regional re-opening.
We would consider 1Q results-related weakness as an opportunity to accumulate. Top picks – DBS and UOB for their regional franchise, strong balance sheet and dividend visibility.

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RHB Bank (RHBBANK MK)
Room for earnings to surprise positively

BUY maintained, TP raised
Our forecasts are conservative, and are about 5-10% below consensus for FY22-23E, predominantly because we have taken a much more conservative stance towards provisioning levels. Even so, we find valuations decent at this stage, such that a BUY is warranted, with potential room for earnings to surprise positively. Our forecasts are maintained, but our TP is raised to MYR6.90 from MYR6.30, on a higher CY23 PBV target of 0.93x (0.85x previously), supported by an ROE of 9.8%. There is also room for dividends to be better than expected as well. 

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