buy sell hold 2021




Laying the foundation

 1Q23 results were in line with expectations. 1Q23 revenue/PATMI at 23%/25% of our FY23e forecasts. Adj. PATMI was at 19% of our FY23e forecasts, negatively impacted by S$5.1mn net reversal in SBC.

 Revenue mix continued to diversify; 76% revenue contribution from top 5 clients (1Q22: 83%). Revenue ex-top 5 clients grew 45% YoY.


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Keppel Pacific Oak US REIT (KORE SP)

Resiliency From Growth Cities And Rich Amenities


We visited nine office properties across five US cities, namely Nashville, Dallas, Houston, Denver and Eastside Seattle – Bellevue and Redmond, which are growth cities benefitting from in-migration. KORE has invested in a rich array of amenities, which are vital for attracting new tenants and retaining existing ones. We also toured the office premises of FleetCor Technologies, Gogo Business Aviation, ZimVie and Meta Quest, which are KORE’s top 10 tenants. Maintain BUY. Target price: US$0.68. 


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Commodities – China

Weekly: Steel Prices Rally On Sentiment Recovery; Rainy Season Ahead


Gold pared gains following the release of strong US non-farm payroll data. Steel prices rallied on hopes of policy support for the property sector. The 4.7% wow increase in rebar’s apparent consumption was largely due to seasonality, and is unsustainable. Cement shipment volume declined 7% last week. As we enter the rainy season and with the restrictions being implemented on construction activities during the national college entrance exam period, downstream demand will remain under pressure. 


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Mapletree Industrial Trust(MINT SP)

Tenant bankruptcy adds to headwinds, maintain HOLD

3 rd largest tenant files for bankruptcy


MINT announced that its 3rd largest tenant by gross rental income (GRI) has initiated bankruptcy proceedings in the US Court. The data centre tenant is a global co-location provider and accounts for 3.2% of MINT’s GRI. Rent for May is partly due. We view the announcement negatively, especially for a “growth” sector like data centre. That said, MINT has a diversified portfolio and tenant base and should be able to mitigate the impact. We lower forecasts and our DDM-based TP by 6% to SGD2.30. Maintain HOLD. We prefer MLT (MLT SP, BUY, TP SGD1.9) due to regional logistics exposure.


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Malaysia Banking

1Q23 results round-up


Earnings growth, stable ROEs, attractive yields While we expect 2023 operating profit to contract 2% on the back of NIM compression, we project core net profit growth of 9%. We expect ROEs to be relatively stable at 10% this year and valuations are undemanding (CY23E PER average of just 8.8x). Dividend yields of >5% provide support. BUYs maintained on CIMB, AMMB, ABMB, HL Bank, HLFG and RHB.


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SingTel (S$2.47, down 1 cent): The Business Times reported that SingTel and SPTel have submitted proposals to the Infocomm Media Development Authority (IMDA) to build nationwide, interoperable quantum-safe networks for businesses. At the Asia Tech x Singapore Social event on Tuesday (Jun 6), Deputy Prime Minister Heng Swee Keat announced the launch of the National Quantum-Safe Network Plus (NQSN+), which is part of the Ministry of Communications and Information (MCI) and IMDA’s Digital Connectivity Blueprint.

At $2.47, market cap of SingTel is S$40.7bln, FY24F P/E is 15.8x, current P/B is 1.6x, FY24F dividend yield is 5% and its present net debt position of S$8.3bln equates to net gearing of 33.2%. With earnings growth expected for SingTel this year where we are anticipating its underlying net profit to improve by 25.6% yoy to reach S$2,578mln in FY24F and given that its dividend yield also appears attractive, we are thus maintaining our BUY recommendation on SingTel.

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