UOB KAYHIAN

SEA (SE US)
4Q22: Results Beat With Strong Focus On Cost Efficiency; Upgrade To BUY

SEA’s 4Q22 core earnings of US$271m beat our and the street’s estimates that are still expecting a loss, due to strong cost efficiency in significantly reducing sales and marketing expenses. Although there could be near-term fluctuations in the performance of SEA, management remains confident on its long-term growth potential. We have raised our 2023 earnings to US$935m, from a US$1.6b loss after this earnings surprise.
Upgrade to BUY with a higher target price of US$94.34.

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Farm Fresh (FFB MK)
Moo-ving Capacity Along At Its Taiping Farm

We come away buoyant from visiting Farm Fresh’s slated processing facility at its Taiping Farm. It will relieve capacity constraint that has largely muted Farm Fresh’s FY23 sales performance. Combined with additional capacity at Muadzam Shah Farm and the launch of its Philippines’ operations, it underpins exciting near-term growth. Plans are also afoot to target the untapped RM2.2b powder milk segment as well.
Maintain HOLD as prospects appear to be fairly priced-in. Target price: RM1.57. 

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LIM & TAN

The bond market is doubling down on the prospect of a US recession after Federal Reserve Chair Jerome Powell warned of a return to bigger interest-rate hikes to cool inflation and the economy.
As derivative contracts referencing the next four Fed policy meetings repriced to levels consistent with the central bank benchmark rate rising by another full percentage point, the yield on the two-year Treasury note climbed as much as 13 basis points on Tuesday to 5.02%, its highest level since 2007.

With faster than expected rate hikes and rising geo-political tensions, we advise caution and defensive positioning in markets and thus continue to “Overweight” Singapore with its “defensive appeal”. The STI’s valuations remain attractive with PE at 11-12x, price to book at 1.1x and dividend yield an attractive 4.4%. In comparison, the S&P 500 index trades at 20-21x PE, price to book of 4x and dividend yield of only 1.7%.

PTT Oil & Retail Business (OR TB)
Positive On OR’s Capex Plans And Expected Earnings Recovery In 1Q23
The key takeaway from OR’s analyst meeting yesterday is its business strategy with capex of Bt101.5b for 2023-27. In 2023, OR will focus on branch expansion in the mobility, lifestyle and global businesses with an investment of Bt31.2b. We have a positive outlook on its sales volume for 2023, and expect sales volume to grow 4% yoy from the expansion of the domestic automobile market and increased economic activities. Maintain BUY with a target price of Bt33.00.

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