buy sell hold 2021




Ample liquidity; uninspiring growth


■ System loans contracted by 6% yoy in Apr 23 for the 6th consecutive month.

■ Deposits further rose 4% yoy in Apr 23; most were in FCY. System deposits now almost equally split between CASA and FDs at 51:49 (Apr 22: 69:31).

■ Reiterate Neutral. Peaking Fed rates limit NIM upside but c.5.5-6.5% dividend yields are appealing. OCBC is our top pick.


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Delayed gratification


■ We cut our FY3/24F/25F core net profit estimates by 22.9%/17.5% post SATS’s analyst briefing as we think its costs are likely to stay high.

■ SATS’s early redemption of WFS’s medium-term notes is likely to see one-off re-financing costs of c.S$35.7m in 1QFY3/24F.

■ Recognition of lease liabilities from the consolidation of WFS could also lead to higher recurring interest of c.S$23.3m from FY3/24F.

■ Given the EPS cuts, our DCF (WACC: 8.0%) TP is lowered to S$2.60. Current valuation is steep at 45x FY24F P/E. Downgrade from Add to Hold.


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REITs – Singapore

S-REITs Monthly Update (May 23)


We are cautiously optimistic that inflation would ease gradually in 2023. The external environment remains uncertain with geopolitical rivalry persisting. We focus on defensive S-REITs with resilient balance sheets. S-REITs would benefit from easing interest rates in 2024 in the event economic growth slows down or falters. Maintain OVERWEIGHT. BUY CLAR (Target: S$3.30), CLAS (Target: S$1.39), FLT (Target: S$1.56), MLT (Target: S$2.82) and MLT (Target: S$1.99).

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Key Takeaways From Investor Conference After FY23 Results


At SATS’ investor conference after its FY23 full-year results on 31 May 23, investors’ questions were mainly centred on its 4QFY23 performance (profit recovery missed our expectations), cost pressure, air cargo outlook and accounting impact of WFS. With a 9.5% share price drop in the past three days, downside risks for SATS are likely priced in. However, we think it may still take another year for investors to see the true earnings potential of SATS with WFS. Maintain BUY and target price of S$3.02.


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IREIT Global ($0.485, unchanged) announced that it has entered into a call option agreement to acquire a portfolio comprising of 17 retail properties (the “New Properties”) located across France (the “Acquisition”). The aggregate purchase consideration for the Acquisition is approximately €76.8 million (approximately S$112.2 million), which is approximately 1.7% discount to the average of the two independent valuations of €78.1 million (approximately S$114.1 million) of the New Properties.

The acquisition is favourable in extending the WALE for IREIT Global from 4.8 years to 5.1 years and is also DPU accretive and will also increase its exposure to a more defensive client profile. Capitalized at $658 million, IREIT trades at undemanding 0.6x price to book valuation and 8% dividend yield. We thus maintain an “Accumulate” rating on IREIT Global.



Seatrium (S$0.123, up 0.3 cents) disclosed in an announcement dated 8:14am today on SGX-ST that it refers to its previous announcements on the investigations by the Brazilian authorities in connection with Operation Car Wash, which began in or around early 2015. The Company has previously made numerous announcements concerning this, with the latest being the announcement dated 28 April 2023. 

At $0.123, market cap of Seatrium is S$8,188mln and its current P/B is 1.0x, while it was loss-making in FY22 and did not pay any dividends. The Company had requested for a trading halt of its shares at 7:35am today and this trading half has not been lifted as of the timing of this publication.

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