buy sell hold 2021



DBS Group

Digital drive


■ During its Investor Day, DBS outlined the digital enhancements to its business processes, and the resulting structural uplift to ROE over FY15-22.

■ Management guides for c.15-17% ROE in the next 3-4 years, implying softer earnings to come as NIMs peak. It guides for +24 Scts DPS uplift in FY24F.

■ Reiterate Hold. DBS trades at c.1.35x FY23F P/BV, potentially pricing in peaked margins. That said, its commitment to higher dividends is appealing. 


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Public Bank Bhd

Robust FY23F NP growth despite lower NIM


■ We are lowering our NP forecasts by 6.8% for FY23F and 2.2% for FY24-25F as we cut our projected net interest income by a similar magnitude.

■ Reiterate Add as our projected NP growth remains robust at 13.4% in FY23F despite the earnings cut.

■ On revised estimates, valuations remain attractive at FY24F P/E of 10.1x while FY23F dividend yield is decent at 4.5%. 

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Civmec (CVL SP)

3QFY23: Robust Earnings Growth Of 20%; Laggard VS Singapore O&G Peers


Civmec’s 3QFY23 earnings of A$15m (+20% yoy) is in line. 9MFY23 formed 77% of our full-year estimate. 3QFY23 net margin grew 1.5ppt yoy. The strong improvement in net margin was driven by delivery of higher-return projects. Civmec continues to see strong tendering activity across all sectors. Yield is attractive at 6% for FY24. Maintain BUY with a 12% higher target price of S$1.23. Civmec is a laggard to Singapore’s oil and gas related stocks with its ytd share price performance of +22% (vs peers’ +25-174%). 


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Hotel – Thailand

1Q23 Results Wrap-Up: Hotels In Upcountry Outperform; Global Plays Will Be Outstanding In 2Q23


Hotel stocks reported a combined core profit of Bt643m (+115% yoy, -81% qoq) for 1Q23, dragged down by MINT. Domestic plays (AWC, CENTEL, ERW) outperformed, especially hotels in upcountry. For 2Q23, MINT will be outstanding, driven by the high travel season in Europe and strong SSSG. We maintain MARKET WEIGHT. Our top pick is MINT. 


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Civmec Limited’s (S$0.705, unchanged) 3QFY23 results were within our expectations with revenue of A$187.8mln (-2.7% yoy) and net profit of A$14.6mln (+20.2% yoy). Overall, 9MFY23 revenue and net profit of A$606.6m/A$42.9m are at 70%/78% of our full year forecasts. We raise our FY23F/FY24F profit forecasts by 10%/11% to A$60.0m/A$63.6m as we note Civmec’s strong presence across all operating sectors, backed by increasing margins and a high-quality order book of A$1.2bln. Maintain BUY with a higher target price of S$1.20 (previous TP: S$1.05), pegged to 11.3x FY23F P/E (0.5SD below five-year mean).


While recessionary concerns abound, we note that Civmec is nicely balanced between private and public sectors and well diversified across the energy, materials, minerals, government infrastructure and government defence businesses. This will help them to better weather an imminent global economic slowdown in 2H’2023. Backed by its defensively low valuations and robust order book of A$1.2bln, we maintain BUY with a higher target price of S$1.20 (previous TP: S$1.05), representing a potential upside of 70.2%.


Bukit Sembawang Estates Limited / BSEL ($4.05, down 5 cents) reported 2HFY23 results and announced that revenue decreased by 15% to $76.5 m and cost of sales increased by 5% to $62.6 m as compared to 2H FY2021/22. The Group’s gross profit decreased by 54% from $30.0 m to $13.9 m as compared to 2H FY2021/22 mainly due to lower profit recognised on development projects. BSEL announced 10 Scts dividend (4 Scts final, 6 Scts special), down from 16 Scts last year (4 final and 12 special), reflecting the lower earnings for FY23. Div yield at its last traded price of $4.05 is 2.47%. 


BSEL’s market cap stands at S$1.05bln and currently trades at 0.7x PB, with a dividend yield of 2.5% based on latest FY23 dividend. Historical PE is a high 31x due to the depressed profits last year. While Bloomberg consensus target price of $5.92 represents significant upside of 50%, we believe that BSEL would need to show good recovery in profits this year and restoration of its dividends before the stock can re-rate sustainably. We currently have no visibility on these fronts.

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