ANALYSTS SAY: Buy, Sell, Hold (24 Mar)

PHILLIP SECURITIES

LHN Limited
Building a real estate franchise with scale

SINGAPORE | REAL ESTATE | UPDATE
 We visited LHN’s recently launched 411 keys co-living property in Orchard. The new project will raise LHN co-living capacity by around 40%.
 Co-living is a product with a flexible lease to serve the medium-term residential lease market. It fits in between tenants requiring longer stays than a hotel and shorter than a rented apartment. It is more affordable than service apartments with an added community experience. 

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Phillip Macro Update
Key points for March FOMC Meeting

UNITED STATES | MACRO | UPDATE 23 March 2023 Event

The U.S. Federal Open Market Committee (FOMC) concluded its two-day meeting on the 23rd of March 2023. The meeting discussed the Fed’s monetary policy stance and economic projection.

Key pointers to note in this meeting
1. Interest rates – In this FOMC meeting, the U.S. Federal Reserve (Fed) raised its benchmark
interest rate by 25bps to a range of 4.75% - 5%. This is the ninth consecutive hike since March
2022. The quarter percentage hike was in line with market expectations, although a handful
of investors were hoping for a pause in the hike cycle in this meeting. Though the pause in the rate hikes was considered in light of what had transpired in the banking sector, the recent
inflationary data point coupled with a strong labour market took precedence. The members
voted unanimously to raise rates to stay in line with achieving their targeted inflationary goal
of 2%. 

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CGS CIMB

Yangzijiang Shipbuilding
Look past litigation, oil tanker a new focus

■ We think YZJSB’s recent share price weakness of is attributable mainly to Trinity Seatrading’s litigation against its subsidiary YZJ Shipping.
■ We think the selldown is overdone as deposits were returned (c.US$12m) and c.US$5m claim amount (1% of FY23F profit) immaterial and provided for.
■ Firm oil tankers market could spur more newbuild orders, a new focus for YZJSB. Retain Add and TP of S$1.66, still based on 1.7x CY23F P/BV. 

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Panoramic Resources
Savannah Mine Plan sets 12+ years of production

PAN has released an updated Mine Plan for the Savannah Nickel Operation underlining a 12+ year operating life, with strong upside to extend. Operations are steadily ramping up and design production levels are forecast to achieve PAN’s target mine rate of 960ktpa in early FY24. We attain a price target of A$0.25/share using our DCF NPV model at a 10%
discount rate. We retain an Add rating on the stock.

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Tencent
In the right mode to pursue growth

■ Tencent’s total revenue reached Rmb554.6bn in FY22, down 1% yoy and up 0.5% yoy in 4Q22, slightly below our expectation.
■ Non-IFRS net profit was Rmb115.6bn in FY22, down 7% yoy, and up 19% yoy in 4Q22, largely in line with our expectation and consensus.
■ GPM improved in 4Q22, better than our expectation, driven by streamlining underperforming businesses and paying more attention to higher ROI investments.
■ We expect revenue to grow 11.6% yoy and non-IFRS NP to increase by 23.5% yoy in FY23F, driven by a low base in FY22 and a faster recovery in games and ads.
■ Reiterate Add with a new DCF-based TP of HK$441. 

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Tsingtao Brewery
Mix upgrade expected to continue in FY23F

■ Tsingtao’s sales rose by 6.6% yoy to Rmb32.2bn, in line with our expectation, driven mainly by good penetration in the household channel during the Covid period.
■ Its net profit grew by 18% yoy to Rmb3.7bn, above our estimate, due mainly to 1) a mix upgrade fully offsetting high raw material prices; and 2) good expenses control.
■ With the on-trade channels gradually recovering, we expect Tsingtao to increase marketing activity in FY23F to boost premium product sales.
■ We expect Tsingtao’s sales to grow by 7.8% yoy in FY23F, along with the catering channel recovery.
■ We reiterate our Add rating with a higher DCF-based TP of HK$104.1, as we increased our FY23-24F EPS forecasts and rolled over our forecasts to FY25F

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