buy sell hold 2021



Sheng Siong Group (SSG SP)

1Q23: Results In Line; Resilient Amid Volatile And High Inflation Environment


SSG’s 1Q23 net profit of S$137m (+0.4% yoy) was in line with expectations, forming 24% of our full-year estimate. Revenue fell 0.4% yoy as demand continued to normalise from the easing of COVID-19-related restrictions. Gross margin improved 0.1ppt to 28.7% on a better sales mix. We expect higher input costs, but consumers may increasingly lean toward SSG’s value offerings as inflationary pressures persist. Maintain BUY with a 3% higher target price of S$1.97. 


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Singapore Strategy

Reshuffling our ESG picks


■ Our All ESG picks have since Sep 2021 outperformed the FSSTI by 25% and the SGX ESG Leaders Index by 26%.

■ The outperformance was due to a mix of ESG and non-ESG factors including execution of green strategies, share buyback and high energy prices.

■ We keep CIT, KEP, SCI, ST, STE as our Top ESG picks; CD, DBS removed. Our high ESG potential picks: BOCS, PANU, UOL, YZJSGD, OCBC (new). 


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Grab Holdings

Driving quality growth


■ We think Grab could report another EBITDA beat vs. consensus in 1Q23F, as an easing competitive landscape enables further reduction in incentive levels.

■ Read-through from peers suggests margin upside for the deliveries segment; mobility segment GMV continues to recover well, aided by tourism recovery.

■ We see room for Grab to lower its FY23F EBITDA loss guidance on the back of its solid execution in 1Q. Reiterate Add and SOP-based TP of US$4.50.


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Focusing on sustainable profitability


■ We think SE could report an earnings beat for 1Q23F as it continues its strong cost-efficiency execution post a rapid turnaround to a profit in 4Q22.

■ Competitive landscape for Southeast Asian e-commerce industry remains healthy with players focusing on raising monetisation while trimming costs.

■ FY23F is a year of “fine-tuning” for SE as it looks to drive sustainable topline growth and profitability. We reiterate our Add call with a TP of US$105. 


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SIA Engineering / SIE ($2.22, unchanged) posted revenue of $796.0 million for the financial year ended 31 March 2023, an increase of 40.6% year-on-year as maintenance and overhaul demand picked up in line with the recovery of flight activities. Group expenditure rose 39.9%, with the increase mainly due to the progressive step down of government wage support and higher manpower and material costs. Manpower costs increased largely due to higher headcount, and cessation of manpower cost mitigation measures.

SIE’s market cap stands at S$2.5bln and currently trades at 39x forward PE and 1.5x PB, with a dividend yield of 2.5%. Consensus target price stands at S$2.63, representing 18.5% upside from current share price. Despite the increase in revenue, SIE continues to post operating losses and we continue to maintain that without concrete signs of a sustained bottomline stability due to the uncertain macro uncertainties such as global recession, geo-political tensions, inflationary cost pressures, we believe SIA Engineering remains a “HOLD” for now.


Riverstone Hldgs ($0.585, down 1 cents) saw 1Q23 net earnings drop 57% yoy to RM46.7mln although it was up by 11.2% qoq as compared to 4Q22. 

At S$0.585, market cap of Riverstone is S$881.9mln, FY22 P/E is 9x, current P/B is 1.6x and its present net cash position of RM989.1mln equates to 33.5% of current market cap. According to Bloomberg consensus, there are four hold recommendations on the stock while the average target price on Riverstone is S$0.63, representing a potential upside of 6.8%.


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