UOB KAYHIAN

Banks
Addressing AT1s

■ Following the reported regulatory action effecting the takeover of Credit Suisse (CS) by UBS, we seek to address key questions on investors’ minds.
■ We highlight that the write-off/conversion of CS’s AT1 securities are idiosyncratic and do not represent similar risks to SG banks.
■ Reiterate Neutral. Strong corporate governance and risk management underscore market confidence in SG banks but we see limited catalysts.

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REITs – Singapore
Data Centre REITs: Backfilling Supported By Tight Vacancies

Asking rents across primary wholesale colocation markets increased 14.5% in 2022, the first increase in five years. Northern Virginia and Silicon Valley are constrained by shortage of power and vacancies, reaching a low of 0.98% and 2.3% respectively. Rising rents and tightening vacancies augur well for DCREIT and MINT’s efforts to backfill potential vacant data centre space. Our preferred BUY is DCREIT (Target: US$0.78), followed by MINT (Target: S$2.79). Maintain OVERWEIGHT. 

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UOB KAYHIAN

Banking – China
Limited Impact Of Credit Suisse Crisis On Chinese Financials

China's bank bond market investments do not have overseas AT1 holdings, limiting the potential contagion risk to the Chinese banking system. China’s AT1 bonds differ from overseas AT1 bonds mainly on their: a) write-down clauses with specific trigger conditions, while foreign AT1 bonds can have principal write-downs; b) dividend suspension mechanism; and c) higher probability of redemption. Maintain MARKET WEIGHT. Our top pick is CMB (3968 HK). 

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7-Eleven Malaysia Holdings
Positioning for expansion in FY23F

■ In its 4Q22 results briefing, SEM clarified that the drop in its CVS 4Q22 core profit of RM7.1m (-72.4% yoy) was due to a one-off impact of RM11.0m.
■ While we are positive on its steadfast store expansion and higher operating hours, the resulting higher operating costs could be a near-term dampener.
■ Reiterate Hold with a higher TP of RM2.10 (26.7x CY24F P/E, its 5-year mean P/E) as we remove the discount of -1 s.d. on improving fundamentals.

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Anta Sports
Positive outlook for FY23F

■ Total sales grew by 9% yoy to Rmb53.7bn in FY22, and net profit dropped by 2% yoy to Rmb7.6bn, slightly below our expectation but better than consensus, due mainly to better cost-saving measures in 2H22.
■ Management expects sales of both Fila and Anta brands to grow by double digits yoy in FY23F; Fila could deliver stronger growth.
■ Management also expects the NP margin to expand yoy in FY23F.
■ We expect sales growth to accelerate to 15% yoy in FY23F and NP to grow by 23% yoy, driven by GPM expansion and better expenses control.
■ Reiterate Add, as we believe Anta group has large potential to further improve store efficiency and margins. We increased our DCF-based TP to HK$133, as we rolled over our forecast to FY25F. 

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