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Eco World Development Group Bhd
Looking for new land purchases
■ EWDG targets to sustain and grow its gross margin through a better product mix in the future, i.e. skewed towards higher-margin properties.
■ The group is also looking at landbanking opportunities, prioritising the Klang Valley area with faster turnover.
■ Reiterate Add given the decent dividend yields, strong property sales momentum and improving balance sheet.
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Oil & Gas Refinery
What is behind the recent sell-off?
■ According to Bloomberg, China authorities may raise the export quota in
4Q22F in order to revive an economy battered by a zero-Covid policy.
■ Large inventory loss could suppress Thai refiners’ accounting GRM in 3Q22F.
Potentially higher export from China could dent diesel crack spread
According to Bloomberg, the Chinese government may allow domestic refineries to export more refined product in order to revive an economy hit hard by strict lockdown policies.
This would be a reversal of its long-term policy to curb carbon emission, announced in early-2022F. Based on China customs data, refined product export was 2.0mt per month during Jan-Jul 22. If Chinese authorities raise the export quota by 15mt in Sep 22, the implied monthly export would jump to 4.6mt if the quota is fully used. This would cap diesel crack spread upside in the coming winter, in our view.
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ComfortDelGro Corporation (CD SP)
Exclusion From The STI; Recovery Remains On Track
CD has been replaced from the STI with Emperador, in line with expectations. Rail ridership remained on track in Aug 22 as most COVID-19 measures have been removed. Taxi passenger demand continues to grow despite a shortage of taxi drivers. CD is expected to face lower profitability as bus service revenue drops from the Downtown Line’s transition. We opine that there is some upside at current price levels. Maintain BUY with a lower SOTP-based target price of S$1.63.
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Syarikat Takaful Malaysia Keluarga (STMB MK)
Growth Momentum Intact
After yesterday’s meeting with STMB, we are now fairly optimistic of the group’s recovery prospects in 2022. More importantly, management has reaffirmed that the risk of a cash call remains low while current dividend can be maintained even under the MFRS17 regime, which has been one of the lingering concerns of the investment community. Maintain BUY and target price of RM4.80 (12.0x 2022F PE), in line with its 10-year historical mean.
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CIMB Group Holdings (CIMB MK)
Comprehensive ESG policies
BUY maintained
CIMB ranks high on sustainability, with comprehensive policies in place. We nevertheless look forward to further improvement in some of its environmental trends and for a financed emissions baseline to be established. We have introduced an expanded ESG tear sheet for the group and assigned it an above average overall score of 67, based on its aggregated quantitative/qualitative/target-based metrics. CIMB remains a BUY with a TP of MYR6.20 pegged to a FY23E PBV of 1x (FY23E ROE: 10%). 4.8% FY22E dividend yield is decent.
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AMMB Holdings (AMM MK)
Decent ESG rating
BUY maintained
While AMMB has established internal ESG policies, further environmental disclosures and a firmer commitment towards net zero and carbon neutral deadlines would serve to enhance overall ratings. We have introduced an expanded ESG tear sheet for the bank and assigned it an above average overall score of 63, based on its aggregated quantitative/qualitative/target-based metrics. BUY maintained with an unchanged TP of MYR4.95, based on a CY23 PBV of 0.8x (CY23E ROE: 8.7%).
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