buy sell hold 2021



1Q23: Resiliency From Home Base Singapore

KREIT achieved positive rental reversion of 9.3% for 1Q23. Portfolio occupancy was stable at 96.3%. Average signing rents for Singapore office leases were S$12.05psf and capital values are on an upward trend. Cost of debts rose 1.05% yoy to 2.86%. KREIT provides 2023 distribution yield of 6.4% (CICT: 5.7% and Suntec: 5.1%). P/NAV is attractive at 0.68x. Maintain BUY with target price of S$1.12.


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GHL Systems (GHLS MK)
Tourist Spending to Further Boost Record-high Transaction Payment Value

We reckon that GHL’s TPA segment would be the main catalyst for 2023. We expect the boost from tourist spending, along with increasing non-cash transaction and cross border payments to further lift the record-high TPV in 2023. Re-iterate BUY with target price of RM1.00. We foresee better earnings growth for GHL given its strong presence in the ASEAN market and the arrival of tourists which would translate into higher transaction payment value in 2023. 


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Keppel REIT ($0.90, down 0.5 cent) announced its 1Q23 financial highlights and reported that it saw an increase in NPI for the majority of its properties due to higher rentals achieved on leases committed in 2022 and higher portfolio occupancy of 96.3% as at 31 March 2023 as compared to 95.1% as at 31 March 2022. Distributable income from
operations for 1Q 2023 was $50.2 million, lower than 1Q 2022 due mainly to higher borrowing costs. Including the Anniversary Distribution of $5 million, Keppel REIT’s distributable income for 1Q 2023 would be $55.2 million, a 2.6% increase year-on-year.

Keppel REIT’s market cap stands at S$3.36bln and currently trades at 19x forward PE, 0.65x PB and 38.7% gearing, with a dividend yield of 6.6%. Consensus target price stands at S$1.04, representing 16% upside from current share price. While we continue to prefer KREIT out of all the office REITs, we are wary of the hawkish rate environment in the short term.

As such, we maintain an “Accumulate on Weakness” for the longer term horizon where investors should see share price appreciation once the Fed pivots.

Nanofilm Technologies (S$1.65, down 4 cents) announced its business update for 1Q23 where the revenue for 1Q2023 was S$33 million, a 40% decrease year-on-year compared with 1Q2023. The first quarter is typically cyclical in line with the 3C production cycle, and it was further impacted by China’s slow and soft recovery since its re-opening


At $1.65, market cap of Nanofilm is S$1.078 bln, Bloomberg consensus FY23 P/E is 21.1x, current P/B is 2.6x, dividend yield is 1.33% and its FY22 net cash position of S$109.7mln equates to market cap of 9.7%. Given its high valuations and muted outlook, Bloomberg consensus 1 year target price is $1.40, implying a potential downside risk of 15.2%. As a result, despite its recent share buy backs, the stock
remains “At Best A HOLD”.


Philippines Property
Foreign outflows: light at the end of a long tunnel

Maintain POSITIVE sector view due to sustained earnings growth, bargain valuations Maintain POSITIVE sector view due to sustained earnings growth amid bargain valuations. Selling by foreign investors YTD has created buying opportunities in undervalued property stocks (RNAV discounts of 46-77%).
We are seeing signs of improvement in developers and expect: (i) healthy revenue growth for malls in 1H23; and (ii) sequential improvement in residential pre-sales over the coming quarters. We forecast FY23 aggregate sector earnings to grow by 15% YoY (see Philippines Property: Overlooked bright spots, 12 Apr 2023). Our Top Pick is SMPH as momentum carried over from the reopening in 2022 should benefit its malls portfolio.
SMPH has been the most resilient to foreign selling. 


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Vietnam Consumer
Sugar industry: 
Turning fundamentally sweet Domestic output, prices rise


Maintain POSITIVE view
While a recent surge in global sugar prices may be short-term, we are witnessing fundamental improvements in Vietnam's sugar industry, which we think underpins a long-term upcycle. The imposition of anti-dumping duties on imported sugar since Feb’21 has resulted in an increase in domestic average selling prices (ASP). This, together with expansion in sugar yield and sugarcane area, should support another sweet year for sugar producers in Vietnam, in our view. Companies with high autonomy in raw material areas such as Quang Ngai Sugar (QNS VN; BUY; CP: VND41,900; TP: VND60,000) will likely benefit the most. The sugar industry is trading at 15x T12M P/E, or 17% below its 5-year mean of 18x.


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