DFI Retail Group Holdings (DFI SP) The Fog Has Lifted – Upgrade To BUY On Better Outlook
The elimination of China’s zero-COVID strategy and the lack of a COVID-19 spike after the recent Chinese New Year holidays have led us to take a more positive stance on DFI and upgrade it to a BUY. Going forward, we should gradually see the fruit of its business transformation plan over the next few quarters. Also, its associates such as Yonghui and Maxim’s should also see better sequential performance over the next few months. Target price: US$3.90 (previously US$2.96).
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British American Tobacco (ROTH MK) 4Q22: A Good Wrap-up For The Year
BAT gained market share across all its segments as it recorded sequential volume growth. However, its opex doubled as it underwent a restructuring in preparation for a multi-product category product expansion. This hints at expectations of an eventual launch of vaping products. 2023 offers decent growth from a recovery in volume growth and a normalising tax rate. We continue to like BAT for its attractive valuations and appealing dividend yield. Maintain BUY and target price of RM16.05.
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CapitaLand Ascott Trust On the right track
SINGAPORE | REAL ESTATE (HOSPITALITY) | FY22 Results FY22 DPU of 5.67 cents (+31%) was in line with our forecast, supported by new acquisitions and the recovery of travel. 4Q22 portfolio RevPAU rose 78% YoY to S$155, reaching pre-pandemic 4Q19 levels on continued improvement in portfolio occupancy (78% vs 60% in 4Q21) and average daily rates (ADR).
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SGX Ltd ($9.15, down 1 cent) today reported 1H FY2023 adjusted net profit of S$236.8 million (S$221.8 million). Total revenue increased 10% to S$571.4 million (S$521.6 million). Adjusted EBITDA rose to S$334.1 million (S$309.6 million), while adjusted earnings per share climbed to 22.2 cents (20.7 cents). The Board of Directors has declared an interim quarterly dividend of 8.0 cents (8.0 cents) per share, payable on 24 February 2023. This brings total dividends in 1H FY2023 to 16.0 cents (16.0 cents) per share.
SGX’s market cap stands at $9.8bln and currently trades at 21x forward PE and 6.3x PB, with a dividend yield of 3.5%. Consensus target price stands at S$9.54, representing 4% upside from current share price and consensus expects next year earnings to grow 5% to $477mln. Given low consensus upside and that yield is close to a risk free bond, we recommend a HOLD on SGX.
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BRC ASIA’s ($1.86, down 0.02) 1Q to Dec’22 net profit fell 12% yoy and 47% qoq to $11.7 million, coming in below expectations as it only accounts for 13% of full year consensus estimates of $87 million. The culprits for the lower than expected performance were :
(1) the construction industry faces multiple challenges of escalating costs (particularly for labour and energy); (2) slower-than-usual site progress resulting in lower-than-expected contractual offtake; (3) Slower offtake is also driving more intense competition for new contracts, compressing margins as firms in the industry strive to overcome the shortfall in delivery volumes.
At $1.86, BRC Asia is capitalized at $510 million and we believe consensus estimates would need to be revised down from $87 million to $65 million, putting forward PE at 8x. Assuming their usual 50% payout ratio, forward yield would still be a reasonable 6.4%. We maintain our “Neutral” call on BRC Asia.
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Chip Eng Seng Corporation Ltd ($0.75, down 0.005) wishes to announce that following a preliminary review of the unaudited consolidated financial results of the Group for the second half-year ended 31 December 2022 (“2H2022”), the Group expects to report a net loss after non-controlling interests for 2H2022.
As at 8 Feb’23, the resultant holdings of the offeror (Tang Dynasty Pte Ltd) already holds 89.15% of Chip Eng Seng, putting them only 0.85% short of the 90% mark. While the offer price is at 0.76x price to book, given the company’s consistently loss making position and just announced profit warning, we believe investors should “ACCEPT THE OFFER” and move on.
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