UOB KAYHIAN

BRC Asia (BRC SP)
1QFY23: Weak Results From Ongoing Headwinds; Downgrade To HOLD

BRC reported lower 1QFY23 revenue (-4.5% yoy) of S$341.2m and net profit of S$11.7m (-12.2% yoy), both below our expectations. The underperformance was due to rising operating costs, an unfavourable product mix and Singapore’s Heightened Safety period dragging down delivery volumes. With ongoing headwinds till 9MFY23, we do not see any near-term catalysts for FY23. Thus, we downgrade to HOLD with a lower PE-based target price of S$1.66 (S$2.42 previously).

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Banking – Malaysia
Diminishing Earnings Tailwinds

The sector delivered a robust earnings growth of 20% yoy in 4Q22 on lower provisions and NIM expansion. However, earnings tailwinds are expected to dissipate on NIM compression and a milder improvement in credit cost in 2023. Excluding the impact of the prosperity tax, 2023 sector earnings are only expected grow by 4% vs 22% in 2022. Maintain MARKET WEIGHT. The unexciting earnings outlook is balanced by an attractive dividend yield of 5%. Public Bank remains our top pick.

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UOB KAYHIAN

JD.com (9618 HK)
4Q22: Solid Earnings Beat, Soft 1Q23 Outlook; Rmb10b Subsidy As The Key

Market Focus
JD’s 4Q22 earnings beat with non-GAAP net profit of Rmb7.7b, 38% above the street’s estimate, as a result of improving operating efficiency. Revenue grew 7% yoy to Rmb295.4b, in line with our and the street’s estimates. Management expects JD Retail’s EBIT margin to remain stable and group margins to expand for 1Q23/2023 despite the Rmb10b subsidy programme, thanks to the narrow losses from new businesses. We maintain BUY on JD with a lower target price of HK$287.00 (US$77.00).

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Dialog Group Bhd
A decent price to reenter the stock

■ Upgrade from Hold to Add on valuation grounds after the recent share price correction; SOP-based TP of RM2.74 remains unchanged.
■ Dialog may see better quarterly earnings ahead from rising tank utilisation and storage rates, and if it secures higher rates for plant maintenance work.
■ Faster-than-expected progress in securing new customers for its Pengerang Deepwater Terminal is another strong potential catalyst.

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Swire Properties Ltd
Better retail ahead, but office still a drag

■ Swire’s underlying profit declined by 9% yoy in FY22 due to fewer disposal gains yoy; FY22 DPS yoy growth was in-line with management’s guidance.
■ We believe China and HK retail rental could see solid yoy recovery in FY23F, but HK office market could suffer due to new completions and rising vacancy.
■ Reiterate Hold with a higher TP of HK$21.1 (45% discount to NAV).

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Malaysia Property
Cautiously optimistic

2H23 sales could be better HoH
Rising construction material costs and labour shortages are issues that continue to haunt the property sector. Developers are now adopting a wait-and-see approach and will launch properties more aggressively in 2H23 (hence, higher sales) pending more clarity in the economic direction. Industrial parks and landed residential properties continue to be favoured.
Our preference remains on lowly-geared township developers. Our BUYs are ECW and SDPR. We also have a tactical BUY on ECWI for its special distribution. Maintain NEUTRAL

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