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ISDN Holdings Ltd
First 10MW hydropower plant obtains COD
■ ISDN announced that its first mini hydropower plant has achieved COD and expects meaningful contributions from this plant in FY23F.
■ As China reopens, we think business activities should also pick up for ISDN from 2Q23F onwards as China rides out the Covid-19 wave in 1Q23F.
■ With its hydropower business contributing over FY23-24F and resumption of activities in China, we upgrade ISDN to an Add as we also rollover to FY24F.
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REITs – Singapore
S-REITs Monthly Update (Dec 22)
Sentiment has improved with the favourable readings for US CPI in Oct and Nov 22 suggesting that inflation has peaked. The sector bottomed in Oct 22. We focus on SREITs with resilient balance sheets to weather the protracted period of elevated interest rates. BUY CLAS (Target: S$1.27), CLAR (Target: S$3.21), FLT (Target: S$1.48), MINT (Target: S$3.12) and MLT (Target: S$1.87). Maintain OVERWEIGHT.
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Technology – Malaysia
Capitalising Before Cyclical Upturn; Be Selective
Conditions for sector risk-on are falling into place after the materialisation of de-rating events alongside appealing valuations. Meanwhile, our empirical study on sector cyclicality against the BM Tech Index also suggests that a sector upswing could be on the cards. While earnings vulnerability is still looming, not all segments are gloom and doom. We prefer companies that are still benefitting from structural growth themes. Maintain OVERWEIGHT.
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MyNews Holdings (MNHB MK)
Brighter Days Ahead
MyNews’ store revenue generation has surpassed pre-pandemic levels. This is however distorted by inflation, closure of underperforming stores and the emergence of CU stores. Most importantly, we believe further organic recovery will be underpinned by an easing of the labour shortage, improvement in tourism and breakeven of its FPC and CU stores over FY23. These catalysts should drive MyNews’ earnings and gradually improve sentiment. Maintain BUY. Target price: RM0.71.
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Malaysia Oil & Gas
PETRONAS Activity Outlook (PAO) 2023-25
6th edition – A more optimistic 2023
PETRONAS generally met most of its activity expectations for 2022. Its latest 2023-25 PAO edition points to a more positive outlook, notably for its: (i) drilling, (ii) fabrication, (iii) OSV for drilling support, (iv) pipelines & (v) maintenance ops. Velesto, MMHE, Icon, Dialog & WSC (for which we have BUY calls on) are the main beneficiaries of this. Our other notable key BUYs in the sector are Yinson, BArmada and Hibiscus.
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Thai Consumer Finance
Year Ahead 2023: Strong loan growth, falling NIM
NEUTRAL until rates peak in 2Q23; Top picks are ASK and TIDLOR
We expect the sector’s NIM to contract on higher cost of funds from the anticipated interest rate uptrend in 2023. The sector should outperform after the Bank of Thailand’s (BoT) policy interest rate peaks and improving asset quality in 2Q23. Our Top Picks remain ASK and TIDLOR as both should deliver robust earnings growth of 18-20% in 2023E. Key risk is weaker-thanexpected asset quality. Maintain SELL on SAWAD as we see asset quality risk in its balance sheet and the lowest NPL coverage in our universe.
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