ANALYSTS SAY: Buy, Sell, Hold (14 Dec)

UOB KAYHIAN

RH Petrogas (RHP SP)
Inexpensive Upstream Oil Company With Drilling Catalysts In 2023

RH Petrogas is an Indonesia-focused oil & gas company with two assets in West Papua. In the last five years, RHP has performed well operationally, with growth in its oil production, and good cost control. Importantly, the company has grown its reserves over the 2017-22 period without any acquisitions. With nearly 91% oil production, RHP is very leveraged to oil prices. The company currently trades on an EV/boe of US$1.88/boe and 2022 ex-cash PE of 2.6x.

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Plantation – Malaysia
MPOB Nov 22: Rainy Weather Affects Production

Malaysia’s palm oil inventory came in lower than market expectation mainly due to lower production and better-than-expected exports. We expect CPO prices to continue to trade at about RM4,000/tonne as we do not expect any near-term major catalysts. Maintain MARKET WEIGHT with IOI Corporation (IOI MK/BUY/Target: RM4.80) as our top pick, as its outperforming downstream operations should cushion the expected normalisation of CPO prices in 2023.

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CGS CIMB

Jumbo Group Limited
Clawed out of the red

■ We expect a significant return to profitability in FY9/23F on the back of rampup in Singapore outlet footfall and relaxation of China Covid-19 measures.
■ China outlets appear set for a steady recovery due to 1) easing domestic pandemic restrictions, and 2) ramp-up in Universal Beijing Resort outlet.
■ Jumbo is set for a year of earnings rebound in FY23F. Upgrade to Add at a higher TP of S$0.35, based on 20x CY24F P/E. 

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Navigating Singapore

◼ Singapore corporate earnings are above pre-Covid-19 levels, and we project CY22F aggregate net profit growth of c.30% vs. 2019. We think this is a tall order to beat in 2023F, amidst slower economic growth.

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Thailand Tourism
Year Ahead 2023: D/G to NEGATIVE due to valuation

Pent-up demand likely happens in 1H23; top pick is MINT
We downgrade the sector to NEGATIVE after share prices surged in anticipation of 4Q22 high season lifting occupancy and room rates. Looking ahead, we see challenges in FY23E, including: 1) pent-up demand that could fade in 1H23, according to the Tourism Authority of Thailand, and 2) continued high costs which already depressed EBITDA margins in 3Q22.
MINT is our only BUY and Top Pick thanks to the good performance of its Europe hotels (60% of hotel revenues) that helped it earn an impressive THB2b profit in 3Q22. Unlike Thai hoteliers that rely mostly on foreign tourists (80-90%), MINT’s customers in Europe are mostly domestic (50-60%) and, in our view, more resilient.

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Philippines Telecoms
Year Ahead 2023: Heightened competition

Pressure on prices and margins; TEL our Top Pick
Even at only c.25% penetration, growth in fixed-line customers significantly decelerated in Jan-Sep 2022 (see Hitting the brakes report). This has led to intensified competition among the telcos, which are fighting for market share through ‘shifting promos’ and offering higher speeds at unchanged price points. In its base plan of PHP1,500/mo., CNVRG now offers up to 200Mbps, outdoing GLO/TEL’s 150/100Mbps offerings. All three telcos have introduced lower-priced plans at PHP1,250-1,299/mo. (at 25-50Mbps). CNVRG also entered the prepaid market, with an initial offer of PHP700/mo. while GLO is launching a prepaid fibre service, on top of its new prepaid wifi plan. While these initiatives are good for consumers and deepen the country’s digital penetration, telcos may see declining ARPUs and margins; hence, we keep our NEUTRAL call on the sector. 

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