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Kimly Group
Divestment of confectionery business
■ Kimly is divesting its confectionery business (Rive Gauche) to Muginoho Global for S$2.8m to streamline operations.
■ The purchase consideration indicates an implied FY22F P/E multiple of c.12x, which we deem fair.
■ We reiterate Hold with an unchanged TP of S$0.41 as we expect headwinds from footfall normalisation after Covid-19 highs and rising cost pressures.
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SEA Ltd
Every cent counts
■ Shopee scaled back its presence in Latin America; Brazil as a core market remains unaffected. Poland is currently Shopee’s last test market standing.
■ Shopee entered the four Latam test markets back in 2021; we estimate they contribute LSD of Shopee’s GMV. The move could save SE US$40m a year.
■ The move is aligned with SE’s latest focus on prioritising profitability. Maintain Hold as sentiment likely to remain negative near-term on further cost-cutting.
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Keppel Corp (KEP SP)
Significant Number Of Acquisitions In 2022 Positions KEP For The Future
KEP, together with its subsidiaries, has spent over S$3.2b on stakes in infrastructure assets globally to position itself for growth after the planned divestment of its offshore marine unit which is expected in 4Q22. Two key acquisitions in 2022 include the European onshore and offshore wind power assets as well as a waste management business in South Korea, with KIT taking key stakes. Maintain BUY. Target price: S$10.11.
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Telecommunications – Malaysia
2Q22 Results In Line; Special Interim Dividend From TIME
2Q22 results were broadly in line except for TM (a strong beat) and Digi (below expectations). The quarter was characterised by a 2% yoy service revenue growth, strong fixed-line take-up and dividend surprises from TIME, TM and Maxis. After the results announcement, we trim sector earnings by 2% and expect them to contract 5% yoy as single-digit service revenue growth will be dragged down by higher depreciation and the one-off prosperity tax in 2022. Maintain MARKET WEIGHT. Top
pick: TIME.
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Velesto Energy Berhad (VEB MK)
A beneficiary of JU’s upcycle
TP raised to MYR0.22. BUY.
We have raised FY23-24’s earnings forecasts by 20%-35% largely to reflect the higher DCRs (+14%-21%) outlook over the next 24M. The JUs DCR is improving significantly. SEA’s JUs utilisation has surpassed 90%, a telltale sign that market tightness is setting in. New contract tenures are lengthening, a positive as clients look to lock-in on charter availability.
Velesto is in an entrenched position to ride this upcycle. Our revised TP is pegged to 0.9x EV/ replacement value (mean).
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AC Energy Philippines (ACEN PM)
Moving forward from coal
Reiterate BUY; TP trimmed to PHP8.0
Following ACEN’s 1H22 outperformance, we lift our FY22E net income forecast to PHP5.1b but cut our FY23 net income forecast by 22% PHP9.1b to factor in ACEN’s divestment of SLTEC. This translates to a lower, rolled-forward DCF-based TP of PHP8 (-15%), which also factors in our higher RFR/MRP assumption of 6.0%/5.5% (from 4.0%/6.0%). Still, we maintain our BUY call given ACEN’s high, long-term earnings growth visibility, as it pursues its higher 20GW RE target by YE30E.
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