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Keppel Corporation
Tranforming into asset light recurring income business model
SINGAPORE | CONGLOMERATE | RESULTS
▪ 1H22 net profit below expectations, at 43% of FY22e profit but interim dividend of 15 cents exceeds expectations. Net profit of $498mn (+66% YoY) was slightly under our expectations as Urban Development dragged due to headwinds from China’s property market.
▪ $710mn of assets monetised YTD, on-track to hit $5bn target by end-2023. However, we expect that the Group will cross the $5bn mark by 1Q23 should the proposed O&M
transactions be completed on schedule in 4Q22.
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Sheng Siong Group Ltd
Sales normalising, but with exceptional margins
SINGAPORE | CONSUMER | 2Q22 RESULTS
▪ 1H22 PATMI beat expectations at 59% of our FY22 forecast. Gross margins surprised on the upside, a record 30.2% in 2Q22 (2Q21: 28.8%).
▪ Revenue is beginning to contract with the relaxation of social and work restrictions. Grocery demand will soften with less home dining post-pandemic. A 5% net increase in store footprint will be supportive of revenue in 2H22.
▪ We are lifting our FY22e earnings by 6%, from higher gross margins. Our BUY recommendation is maintained. The target price is lifted from S$1.75 to S$1.86, due to higher earnings. Valuation is pegged to 23x PE, a 10% discount to the 5-year historical average of 25x PE. We expect revenue to normalise in FY22e/FY23e, placing downward pressure on growth. New store openings of three to five per year, rising market share
and improving gross margins will help stem part of the earnings decline.
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United Overseas Bank Limited
Boosted by higher net interest income
SINGAPORE | BANKING | 2Q22 RESULTS
▪ 2Q22 earnings of S$1,113mn were in line with our estimates due to higher net interest margin and healthy net interest income growth. 1H22 PATMI is 43% of our FY22e forecast.
▪ NII was up 18% YoY from a NIM increase of 11bps YoY to 1.67% and loan growth of 8% YoY. Fee income fell 1% QoQ while other non- nterest income was up 170% QoQ.
Management is guiding single-digit loan growth with higher NIMs, stable cost-toincome ratio and slightly higher provisions. |
DFI Retail Group Holdings (DFI SP)
1H22: A Messy Set Of Results
DFI reported a much weaker-than expected 1H22 with a loss of US$58m driven largely by its associates Yonghui and Maxim’s as well as poor profit contribution from its grocery business. Maintain HOLD as the company’s fortunes remain intimately tied to China’s COVID-19 policies. Target price: US$2.96 (previously US$2.87).
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Japfa (JAP SP)
2Q22: Results In Line; Weakness From Vietnam And High Feed Costs
Japfa’s 1H22 core PATMI of US$54m (-54% yoy) was in line with our expectations, forming 52% of our full-year forecast. 2Q22 core PATMI of Indonesia’s poultry segment (-20% qoq) and China’s dairy segment (-10% qoq) fell due to high feed costs. However, Vietnam’s core PATMI improved from a US$11m loss in 1Q22 to a US$2m loss in 2Q22 due to higher sales volume of poultry and recovery of poultry prices, but the swine business remains weak due to resurgence of ASF. Maintain HOLD. Target price: S$0.63.
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Sheng Siong Group (SSG SP)
2Q22: Results In Line; Inflationary Pressure To Drive Demand For Groceries
SSG’s 1H22 net profit of S$68m (+2% yoy) was in line with expectations, forming 51% of our full-year estimates. 1H22 revenue fell 1% yoy as COVID-19 measures were lifted in 2Q22 but gross margin increased 1.2ppt to 29.4% on a better sales mix.
As a result, gross profit rose 3% yoy. We believe SSG should continue to enjoy healthy demand for groceries as rising inflationary pressure will prompt more consumers to dine at home. Maintain BUY and target price of S$1.91.
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