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Bermaz Auto Berhad
Accelerating growth in 1QFY4/23
■ 1QFY23 core NP was in line at 28%/29% of our/consensus FY23F core NP.
■ Core net profit rose 4.4x yoy on stronger sales volume and higher share of associate profit. 3.0 sen first interim DPS declared for 1QFY23.
■ We expect BAuto to maintain a healthy sales volume in 2QFY23F on the back of robust order backlog. Reiterate Add with an unchanged RM2.40 TP.
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Agribusiness
Stocks could peak only in Oct/Nov 2022F
■ Malaysian palm oil stocks rose 18.2% mom to 2.09m tonnes as at end-Aug 2022 due to higher output and imports — higher than our expectations.
■ We project palm oil stocks to rise 9.2% mom to 2.29m tonnes by end-Sep 2022F, as rising output trump exports.
■ Planters’ earnings likely peaked in 2Q22, as average CPO price in Jul-Aug of RM4,116/tonne are 37% lower vs. 2Q22’s RM6,552/tonne. Sector Neutral.
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Bermaz Auto Berhad (BAUTO MK)
1Q23 results in line
Maintain BUY and MYR2.90 TP
BAuto is off to a good start. Core earnings quadrupled YoY in 1QFYE4/23; 22% of our FY estimate. We expect the earnings momentum to continue over the next few quarters, underpinned by a strong orders backlog. It also declared a higher DPS (6x YoY); 68% DPR, a positive and we do not rule out higher DPR (>70%, FY22: 65%) this FY on its improved financials.
Our TP is unchanged, based on 15x FY23 PER.
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Sappe PCL (SAPPE TB)
Thirst for growth
Initiate BUY for strong growth potential: TP THB60
Initiate coverage with BUY and TP of THB60.00. SAPPE is a leading drinks producer in Thailand with about 65% of sales from exports in FY21. We believe SAPPE is at a growth inflection point that could see core profit accelerate at a 22% CAGR from FY21-26E (vs FY16-FY21 at 5%), driven by:
1) the success of many products, eg Mogu Mogu, the export sales of which paused during Covid; and
2) resumption of export growth whose sales are more profitable because of higher selling prices. We estimate export sales contribution will rise to 84% of total sales in FY26E from 65% in FY21. Because of the higher gross margin for exports, we expect a 22% core profit CAGR from FY21-FY26E, outpacing our forecast sales CAGR of 19% for the same period. Because about 75% of FY22E sales are from exports, SAPPE is a prime beneficiary of the weak THB trend. We estimate every 1% THB depreciation leads to THB1.9% higher core profit.
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Retail REITs – Singapore
Recovery From Downtown Malls, Resiliency From Suburban Malls
Retailers and F&B operators are back operating at full capacity after the economy reopened in Apr 22. Penetration for e-commerce has receded. Pick-up in visitor arrivals is an added catalyst for downtown malls in 2H22. Downtown malls offer better upside from reopening, while suburban malls are more defensive. Maintain OVERWEIGHT. BUY for FCT (Target: S$2.74), LREIT (Target: S$0.96) and MPACT (Target: S$2.22).
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Plantation – Malaysia
MPOB Aug 22: Inventory Hit 33-Month High On Higher Production And Imports
Malaysian palm oil inventory hit a 33-month high as at end-Aug 22 on better production as trees are at peak season and the recent small intake of new foreign workers has led to better crop recovery. Production was flat yoy for 8M22 and total production for 2022 is likely to only be at 18.0-18.2m tonnes. More foreign workers may start coming in towards 4Q22 which will reduce crop losses but it is still far from solving the shortage issue. Maintain MARKET WEIGHT.
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