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STRATEGY – SINGAPORE
Alpha Picks: Add Sembcorp Industries And BRC Asia,
Remove Keppel Corp And MM2
Our Alpha Picks outperformed the STI in Jul 22, increasing by 5.4% on a market cap weighted basis vs the market’s 3.5% increase. For Aug 22, we add Sembcorp Industries as we believe it will continue to re-rate on the back of its green energy expansion and BRC Asia to ride on the upturn in the construction industry. We have taken out Keppel Corp following a positive share price rally after 1H22 results. We have also removed MM2 due to a lack of near-term catalysts.
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Ascott Residence Trust (ART SP)
1H22: Raising Room Rates With Sustained Pent-up Demand
ART’s portfolio RevPAU increased 91% yoy and 85% qoq to S$124 in 2Q22. ADR rebounded 40% qoq. Portfolio occupancy improved from 50% in 1Q22 to 70% in 2Q22.
Australia, Singapore, the UK and the US registered strong growths. ART plans to raise the asset allocation target in longer-stay assets by 10ppt to 25-30% of portfolio value in the medium term. Distribution yield is expected to improve to 5.5% for 2023. Maintain BUY. Target price: S$1.35.
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CDL Hospitality Trusts (CDREIT SP)
1H22: Accelerate Recovery With Higher Room Rates
For Singapore hotels, RevPAR doubled yoy to S$151 in 2Q22 with occupancy improving 5.3ppt yoy to 75.8% and ADR increasing 85% yoy to S$200. NPI from Singapore,
Maldives and the UK grew 60.3%, 90.9% and 354% yoy respectively. Outlook is positive.
Singapore will benefit from full impact of the reopening of international borders with the F1 Singapore Grand Prix in September and more than 66 international events in 2H22.
Maintain BUY. Target price: S$1.54. |
Raffles Medical Group (RFMD SP)
1H22: Outperformance Led By COVID-19 Revenue
RFMD reported 1H22 PATMI of S$59.7m (+51.3% yoy), exceeding our expectations.
Outperformance was led by the healthcare services segment, backed by higher clinic visitation rates and contributions from COVID-19 revenue. Domestically, hospital patient loads are improving as foreign patients start to return while elective surgeries have ramped up. In China, continuous lockdowns have impacted operations, especially in Shanghai. Upgrade to BUY with a higher PE-based target price of S$1.42.
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Raffles Medical Group
Healthcare demand stronger than ever
■ 1H22 revenue/earnings exceeded estimates at 59.3%/55.9% and 81.5%/75.5% of our and consensus’ FY22F estimates.
■ We increased our EPS forecasts for FY22-24F by 43.0%/27.5%/40.5% on higher local patient volumes and returning foreign patients.
■ Reiterate Add with a higher TP of S$1.50, pegged at 16x FY23F EV/EBITDA, 0.5 s.d. below its 5-year mean, with a discount for gestating China assets.
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Mapletree Commercial Trust
Recovery underway
■ 1QFY3/23 revenue/NPI in line with our estimates, at 25%/25.5% of our
FY23F forecasts.
■ Tenant sales at VivoCity exceeded pre-Covid levels.
■ Reiterate Add rating with an unchanged TP of S$2.18.
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