buy sell hold 2021




4QFY23 the first of many hurdles to clear


■ 4QFY3/23 core net profit of S$7.2m (ex. S$1.7m of impairment in associates) was ahead of our S$2.5m expectation, but below BBG consensus’ S$10.1m.

■ We believe 0.5% qoq revenue growth highlights aviation industry recovery, but weak macroeconomic conditions could derail the pace of recovery.

■ We expect pressure on share price as the market awaits more clarity from its analyst briefing on 30 May 2023. Reiterate Add and TP of S$3.10.


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(KMLY SP) 1HFY23: Results Within Expectations; Macroeconomic Challenges Remain


For 1HFY23, Kimly’s PATMI remained steady (+0.7% yoy), forming 53.4% of our full-year forecast. Revenue from the food retail segment fell 6% yoy, driven by the normalised demand for delivery sales. Kimly maintained its high net cash balance of S$53.9m (+30.2% yoy). We opine that there is limited upside at current levels in the absence of near-term catalysts. Maintain HOLD with a target price of S$0.36. 


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Commodities – China

Weekly: US Dollar Strengthens On Hawkish Fed Expectations; Rebar Price Plunges To Lowest Level Since Apr 17


The US dollar strengthened last week on dwindling rate cut expectations. Steel prices continued searching for a bottom, with rebar prices dropping to the lowest level since Apr 17. HRC steel-raw materials spread was compressed by 7% wow. Steel mill activities recovered with molten iron output up 0.9% wow. National average cement price edged down 0.9% wow while shipment volume was down 1.8% wow. Cement-coal spreads widened by 3.0% wow with a 9.8% wow decline in thermal coal price.


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Frencken Group Ltd (FRKN SP)

AI hype: worth watching


Maintain BUY with unchanged TP of SGD0.94 Amid the recent AI craze following Nvidia’s forecast raise due to strong demand for its AI chips, semi-con related stocks have mostly rallied, even in Singapore. Our channel checks show that orders are yet to be positively impacted but inventory could be depleted faster if the trend persists. We believe that most of Frencken’s weak outlook for FY23E is priced in the shares and it’s one of the few semi stocks trading below its NAV of SGD0.93. As a result, we maintain our BUY with an unchanged TP of SGD0.94, pegged to 9x FY24E PE.


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SATS Ltd’s ($2.75, down 0.08) Full Year FY23 (1 April 2022 to 31 March 2023) Group revenue grew $581.5mln, or 49.4% year-on-year, to $1,758.3mln, with growth in both Food Solutions and Gateway Services driven by travel recovery and higher cargo revenue from AAT consolidation. Food Solutions revenue increased 35.6%, or $228.4mln, to $869.3mln while Gateway Services revenue grew 66.9%, or $356.0mln, to $888.5mln for the full year over the same period last year.

At $2.75, SATS is capitalized at $4.1 billion and based on consensus estimates, forward PE is 25x while price to book is 1.7x and there is no dividend payment. While consensus 1 year target price of $3.23 implies a potential upside of 20%, we would prefer to “HOLD” for now pending results from the consolidated entity’s result between SATS and WFS in 1Q FY24.



SIA Engineering / SIAEC ($2.42, down 3 cents) and Cambodia Airport Investment Co., Ltd (CAIC) announced that they will be signing a joint venture agreement today to form a line maintenance joint venture in Cambodia. Under the agreement, SIAEC will hold a 51% equity stake in the joint venture, with CAIC holding 49%. 


At $2.42, market cap of SIA Engineering is S$2,748.9mln, trailing 12-mth P/E is 41.5x, current P/B is 1.7x and dividend yield is 2.3%. According to Bloomberg consensus, there are two buys and one hold recommendations on the stock while the average target price on SIA Engineering is S$2.63, representing a potential upside of 8.7%.

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