ANALYSTS SAY: Buy, Sell, Hold (12 July)

CGS CIMB

Raffles Medical Group
1H22F preview: earnings transition

■ RFMD’s share price has fallen 18% YTD; we believe investors are wary of the earnings gap left behind by Covid-19-related services in FY21.

■ We estimate a c.10% decline in core net profit in 1H22F, with the return of BAU cases offsetting lower contribution from Covid-19 services.

■ Upgrade to Add from Hold with a lower TP of S$1.27 on more palatable valuations with a change in valuation methodology from SOP previously.

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Malaysia Strategy
A leap in the dark

■ We expect the market to remain weak with downside risks in 3Q22F, as it attempts to price in concerns over global monetary policy tightening
■ Market could bottom and rebound in late-4Q, with upside likely from a more stable political system, market-friendly budget and return of foreign workers.
■ We advise investors to take shelter in stocks that offer defensive earnings, high dividend yields, and benefit from tourism recovery and rising rates.

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UOB KAYHIAN

UOB KAYHIAN

Construction – Malaysia
Positioning For A More Meaningful Recovery In 2023

The sector is expected to see a gradual recovery continue in 2H22, following healthy yoy earnings growth in 4Q21 and 1Q22, driven by accelerated progress billings. Labour shortage and higher building materials cost will continue to pressure the recovery momentum.

More meaningful recovery will be seen in 2023, supported by the roll-out of infrastructure projects and higher productivity levels from the easing of the labour shortage. Maintain MARKET WEIGHT. Top picks: Gamuda and Kerjaya Prospek. 

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TRUE Corp (TRUE TB)
2Q22E core loss likely widened

Revenue trend remained weak in 2Q22E: D/g to HOLD
D/g to HOLD as we estimate 2Q22E core net loss widened both YoY and QoQ to THB2.6b due to low revenue and rising SG&A expenses. We estimate 2Q22E mobile revenue decreased 0.8% QoQ due to weak consumer purchasing power.

Trimming our target price by 2% due to TRUE’s lower stake in DIF, which offered 8% yield for FY21. We prefer ADVANC (ADVANC TB, CP204.0, BUY, TP THB230.0) due to stronger 2Q22E core net profit trend and potential upside to TP from TTTBB-JASIF deal.

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Hana Microelectronics
Fundamentally solid; valuation at support

■ We believe the market has overestimated the impact of chip demand slowdown. Past cycles suggest impact on Hana’s EPS may be limited.
■ Hana should find near-term valuation support at 1.3x FY22F P/BV (-0.5 s.d. from its 5-year mean). We believe the risk-reward is attractive at this level.

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