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Singapore Telecommunications (ST SP)
On Stronger Footing
Singtel is set to deliver a three-year earnings CAGR (FY22-25F) of 15% vs -12% during the COVID-19 period (FY19-22). This reflects monetisation of 5G in Singapore and Australia, absence of digital losses (from Amobee), double-digit NCS growth and associates benefitting from the economic reopening. A regional data centre is shaping up as Singtel aims to add another 100MW of capacity in the next 3-5 years to build a DC portfolio worth S$7b-8b. Maintain BUY. Target price: S$2.90.
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DiGi.Com (DIGI MK)
2Q22: Below Expectations; Positive Merger Synergies In 2023
2Q22 core net profit fell 26% yoy to RM213m on the back of higher finance cost and tax from Cukai Makmur. This brings 1H22 core net profit to RM461m (-17% yoy) − below expectations. Digi revised 2022 EBITDA guidance downward to account for inflationary pressure and merger cost and we cut 2022 net profit by 8%. The Digi-Celcom merger is expected to be completed by 2H22, potentially lifting 2023 net profit by 15%. BUY on weakness. Target price: RM3.85.
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Singapore Post Ltd
Pushing back recovery expectations
■ SPOST expects its Post and Parcel segment to see operating losses in 1Q23F, while other segments continued to perform well.
■ IPP recovery was hindered by China lockdowns which caused conveyance costs to remain elevated, but we expect an improvement in coming quarters.
■ Focus of 1Q business update will be on how SPOST plans to navigate headwinds for its DPP business. Maintain Add with a lower TP of S$0.80. |
ComfortDelGro (CD SP)
Slowly but surely
Re-rating on the cards; Maintain BUY
ComfortDelgro (CDG) has been a relative laggard (+1.4% YTD) compared to other reopening plays. We believe the market will re-rate the stock once the group is able to consistently deliver core EPS growth, driven by better operating leverage. In our view, this should come on the back of recovery in ridership across its key geographies, and continued declines in fuel prices. Maintain BUY and DCF-based TP of SGD1.76 (8.3% WACC and 1% long-term growth). CDG is slated to report its 2Q results on 12 Aug.
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Genting Bhd (GENT MK)
MGM to buy GENT’s 53% shareholding in GENS?
Maintain BUY call and MYR5.96 SOP-based TP
Bloomberg reported that multiple suitors, including MGM Resorts International have approached GENT to buy its 53% shareholding in GENS (link). In our view, there are reasons for and against GENT acquiescing.
No matter the outcome, this news reiterates our view that GENT is deep in value. Maintain earnings estimates, BUY call and MYR5.96 SOP-based TP for now.
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L&T Technology Services Ltd
Encouraging start to the year
■ Retains FY23F revenue guidance but invariably increases it in CC terms.
■ Robust deal wins provide comfort in an uncertain macro environment.
■ Margin performance remains resilient despite persistent headwinds.
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