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Offshore Marine – Singapore
Outlook Remains Strong, Supported By High Oil Prices
The rig market, particularly the semi-submersibles segment, has continued to gain
strength in 2022 with higher utilisation and day rates. The industry continues to search for an equilibrium as supply destruction has persisted across asset classes this year.
Heading into 4Q22 and 1Q23, we believe that oil prices will be well supported above the
US$100-110 range. Our sector rating remains OVERWEIGHT, and our top picks are
Yangzijiang, Keppel and Sembcorp Marine.
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My EG Services (MYEG MK)
2Q22: On A Roll With Record Quarterly Profits
MYEG posted record a high net profit of RM89m (+10% yoy), underpinned by strong recovery in its road-transport and immigration segments as well as contribution from the sale of Zetrix tokens. Zetrix could provide a significant earnings uplift to our 2022-23 forecasts. Re-rating catalysts include Zetrix’s ongoing monetisation, car e-Testing’s commercial rollout in 2H22, the planned listings of its various investee companies and capital management. Maintain BUY. Target price: RM1.30.
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RHB Bank (RHBBANK MK)
2Q22: Lower Provisions
RHB’s 2Q22 results are in line, underpinned by lower provisions. The group declared an interim dividend per share of 15 sen. We continue to like RHB given its solid CET1 ratio that allows the group to sustain an attractive dividend yield of 6.5%/7.2% for 2022/23. RHB is among the strongest beneficiaries of rising interest rates, which provides potential upside surprise to our conservative NIM assumptions. Maintain
BUY and target price of RM6.60 (0.88x 2022/23F P/B, 9.5% ROE). |
PropNex Ltd (PROP SP)
In pole position
Ready to scale up; Initiate BUY
We initiate coverage on Propnex with a BUY rating and 12-month TP of SGD1.95, pegged at 14x FY23E P/E, representing about one standard deviation above its historical mean. In our view, the premium valuation to its closest SGX-listed peer, APAC Realty at 10x P/E, is justifiable given its increasing market share and leadership position in Singapore, coupled with a cash generative business model. Backed by its strong balance sheet (with net cash/mkt cap of c.22%), we believe the group can easily sustain its high dividend payout of more than 70%. This would also translate into an attractive prospective yield of around 7.0%.
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Greatech Technology (GREATEC MK)
2Q22: Supply chain woes far from over
Results below expectations; D/G to HOLD
1H22 results undershot as supply chain/inflation-induced pressures continued to squeeze GREATEC’s historically vaunted margins. With few tangible signs of supply chain disruptions easing in the near-term, we have reduced FY22/23E estimates by -28%/-9% but keep FY24E unchanged. We also D/G the stock to a HOLD, pegged to 26x FY23 PER, at -0.5SD to the LT mean (from 32x FY23 PER, at the LT mean) on account of material project delivery risks and a tempered valuation premium as the Fed turns increasingly hawkish on inflation. Our revised TP is now MYR3.90 (-26%).
We prefer Frontken, Inari and Vitrox in the MY tech (hardware) sector.
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KPJ Healthcare (KPJ MK)
2Q22: Recovery underway
Maintain BUY
KPJ’s operational performances improved gradually in 2Q22 due to higher patient volumes and better cost management. While 1H22 earnings made up just 38/40% of our/consensus FY22E, we believe 2H could benefit from rising patient volumes, higher health tourism activities and sustained high revenue intensity. Maintain BUY with an unchanged sum of parts-based TP of MYR1.01.
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