CGS-CIMB

Pan-United Corporation – Construction recovery gaining pace

Recommendation: BUY (Maintained), Last Done: S$0.43

Target price: S$0.68

• According to data from the Building and Construction Authority (BCA), demand for ready-mixed concrete for the first three months of 2022 was 5% higher than the same period in 2021.
  
  
• The price of ready-mixed concrete (RMC) has also risen by 8.4% from Dec 2021 to April 2022 driven by a combination of higher raw materials costs and demand. The average daily charter hire of the Supramax and Handysize has risen from an average US$28,650 per day in 2021 to US$31,150 today.
  
  
• Supply-chain disruptions and volatile freight costs continue to hamper growth recovery. We believe the rising cost of RMC is a potential concern, though this is mitigated by the Group’s ability to pass-through these costs to the customer.
  
  
• Maintain BUY with higher target price of S$0.68, from S$0.46. We raise FY22e/FY23e earnings by 35%/26% respectively on account of the higher demand for ready-mixed concrete brought about by the construction recovery. Our TP is based on 12x FY22e P/E, a 20% discount to its 10-year historical average P/E on account of the still uncertain business environment.

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Credit Bureau Asia Ltd
Digital banks kick off new revenue stream

■ Two DWBs (digital wholesale banks) launched in Singapore – kicking off one of CBA’s new prospective revenue streams. CBS’s member bureaus will rise from 31 to 36.

■ We think that DFBs (digital full banks) could add at least c.3-6% in incremental revenue by end FY26F depending on the banks’ ramp-up. DWBs will augment this further.

■ Reiterate Add. Growth prospects abound, though earnings accretion may
take time. Meanwhile, ASEAN border reopenings will support growth.

Reiterate Add with DCF-based TP of S$1.20

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KGI

CGS CIMB

Capitaland Integrated Commercial Trust (CICT SP):
Further ease of restriction measures of nightlife

• Reopening play. Nightlife establishments with dancing among patrons will no longer be subjected to a capacity limit from 14th June. Patrons will also no longer need to obtain a negative antigen rapid test (ART) result to enter the venue, said the Ministry of Health (MOH) on 10th June. The expiry of leases in Clarke Quay resulted in a slight drop in the occupancy rate of the retail segment in 1Q22, and it is expected to recover in 2H22.
  
  
• Inflationary hedge. Out of CICT’s total borrowings of S$8.8bn as of 1Q22, 85% are on fixed interest rates, which is able to shield the impact of interest rate hikes. In addition, because rents and property value tend to increase amidst the increase in overall prices, the REITs whose properties are able to capitalise on that can provide an inflation hedge.
  
  
• Positive consensus estimates. Currently, CICT has a consensus rating of 17 BUYS, 3 HOLDS and 0 SELL, and a 12M TP of S$2.47.

Agribusiness
CPO price could fall on higher supply in 2H

■ Malaysian palm oil stock fell 7% mom to 1.52m tonnes as at end-May due to
higher exports — within expectations; neutral for CPO price.

■ Indonesia’s resumption of palm oil exports in Jun could dampen export
volumes from Malaysia.

■ We project palm oil stock to rise by 5% by end-Jun 2022F and CPO price to
trend lower in 2H22F due to improved edible oil supplies. Reiterate Neutral.

We favour Kuala Lumpur Kepong (KLK) as it is a beneficiary of rising CPO prices. The other attraction of KLK is the potential earnings accretion from the acquisition of IJM Plantation.

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