| CGS CIMB |
CGS CIMB |
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Singapore Airlines Downgrade to Reduce on valuation grounds
■ Downgrade from Hold to Reduce on valuation grounds as SIA is trading at 1.30x historical P/BV, almost +3 s.d. above the mean since 2011. ■ Our TP is raised to S$6.53 (CY23F P/BV of 1.04x); the shares will trade exfinal DPS of 28 Scts on 1 Aug, potentially removing a key support. ■ Despite forecast earnings strength for FY24F, competition in FY25F will likely intensify; we think there is more downside risk for investors than upside risk.
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Petronas Chemicals Group Multiple de-rating catalysts; reduce TP
■ Reiterate Reduce, with a lower TP of RM5.68, based on a lower CY23F P/BV target multiple of 1.15x (3 s.d. below the mean since 2011). ■ While we have not changed our core EPS estimates in this report, we think PCG will undergo a valuation de-rating due to multiple near-term challenges. ■ De-rating catalysts include weakening selling prices, heavier Pengerang commissioning costs, and future operational losses from Pengerang
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UOB KAYHIAN |
UOB KAYHIAN |
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LHN (LHN SP) Market Leader In Co-living Space; Upside From More Value Unlocking
LHN has established itself as the market leader in the newly-emerged co-living space in Singapore with a 32% market share and a robust growth pipeline. Demand for co-living space is expected to be driven by recovering foreign demand. We expect an about 70% increase in the number of co-living keys to drive LHN’s FY23 core earnings by 46% yoy. More value unlocking activities after the divestment of the logistics business may lead to higher special dividends. Initiate coverage with BUY. Target price: S$0.55.
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Commodities – China Weekly: US PCE Core Index Softens To 4.6%; Domestic Steel Inventory Rebounds
Hawkish comments from the Fed Chair last week were supportive of elevated US yields and strengthening of the US dollar. Powell is not ruling out the possibility of consecutive rate hikes and expects inflation to return to 2% at the earliest in 2025, which weighs on the outlook of gold price. Inventory digestion for steel products ended last week while production remained on the rise. Construction activities were slowed by the hot rainy weather and demand for steel products and cement to remain suppressed.
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| MAYBANK KIM ENG | MAYBANK KIM ENG |
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Frasers Centrepoint Trust(FCT SP) Attractive valuation, resilient retail sales; upgrade to BUY
Favourable risk reward for domestic play We upgrade FCT to BUY from HOLD on a combination of attractive valuation, resilient retail sales, quality portfolio and potential rotation of flows. FCT is trading below book and yielding near its historical mean. Retail sales continue to grow at a mid-single digit pace and the labour market remains tight. This augurs well for distribution stability. With visitor arrivals experiencing the first post-pandemic dip in May, investors may rotate into domestic focussed plays like FCT. We retain our SGD2.35 TP based on a dividend discount model factoring in 6.6% cost of equity.
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Genting Singapore (GENS SP) The recovery is intact, in our view
Maintain BUY call with lower DCF-TP of SGD1.12 (-5%) GENS’ share price has retreated since reporting below consensus results on 12 May 2023. We had a virtual meeting with management to get an update. We understand that operations have been improving steadily. While EBITDA margins may come in a tad lower than we expected, absolute EBITDA is on track to recover to pre-COVID levels in FY24E. We trim our core net profit forecasts by 6-12% (EBITDA forecasts by 8-14%) and DCF-TP to SGD1.12 from SGD1.18. Maintain BUY for 23% upside potential.
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