| CGS CIMB |
CGS CIMB |
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ComfortDelGro Time to hop on
■ Upgrade to Add as we see a fundamental inflection point – we estimate CD’s PATMI returning to yoy growth in 2Q23F and a stronger showing in 2H23F. ■ Higher taxi monetisation could raise FY23F segment EBIT by 50% yoy; we also see UK operations returning to the black with better cost pass-through. ■ Supported by stronger core earnings and potentially higher payout by subsidiary SBS Transit, we also expect higher base DPR by CD in FY23F.
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PTT Exploration & Production Lifting petroleum sales guidance
■ The earlier-than-expected Sabah H production restart led to slightly higher sales volume in 2Q23F. ■ While oil prices may fall on global economic growth concerns, PTTEP’s resilient sales volume should support near-term share price. Maintain Add.
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LIM & TAN |
LIM & TAN |
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OCBC ($12.35, up 0.04) has unveiled a unified brand across its core markets, solidifying its One Group approach to capitalise on the sizeable ASEAN-Greater China opportunity. With this sharpened ASEAN-Greater China focus, OCBC expects to accelerate its growth and deliver S$3 billion in incremental revenue by 2025, which is on top of its current growth trajectory. At $12.35, OCBC is capitalized at $55.5 billion and trades at an attractive forward PE ratio of 8x and price to book of 1x. Dividend yield is also attractive at more than 6%. With consensus 12 months target price of $14 implying a potential upside of 14%, we maintain our “Accumulate” recommendation on OCBC. We believe the latest new and more aggressive growth targets set by management could help accelerate and catalyse OCBC’s growth trajectory over the next few years ahead.
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City Developments Limited ($6.77, unchanged) announced that it has acquired the Nine Tree Premier Hotel Myeongdong in Seoul from Shinhan Nine Tree Real Estate Investment Trust for KRW 140 billion (approximately S$143.9 million) or KRW 343 million (approximately S$353,000) per key. Opened in 2017, the freehold 17-storey upscale hotel comprises 408 rooms and enjoys a prime location in the Myeongdong-Euljiro commercial district, within walking distance to famous shopping areas including the Myeongdong Walking Street, Lotte and Shinsegae department stores, as well as restaurants, street food, business and entertainment venues. It is also conveniently located within a 4-minute walk to the Euljiro 3-ga subway station. CDL’s market cap stands at S$6.1bln and currently trades at 14x forward PE and 0.7x PB, with a dividend yield of 2%. Consensus target price stands at S$8.43, representing 25% upside from current share price. We maintain our “Accumulate” rating on CDL.
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| DBS GROUP RESEARCH | LIM & TAN |
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News Analysis: More redeployment of divestment proceeds
What has happened? City Developments (City Dev) announced the acquisition of Nine Tree Premier Hotel Myeongdong II (Nine Tree Premier Hotel) in Seoul, 408-room freehold upscale hotel, for KRW 140b (S$143.9m) / KRW343m (S$353k) per key. The hotel opened in 2017 and is located in the prime Myeongdong-Euljiro commercial district, within walking distance to famous shopping areas including the Myeongdong Walking Street, Lotte and Shinsegae department stores, restaurants, street food, business and entertainment venues. It is accessible via the Euljiro 3-ga subway station, which is within a 4-minute walk. Our view City Dev retains its presence in the hospitality market in Seoul with asset redeployment into the newer Nine Tree Premier Hotel from one of its biggest divestment of Millennium Hilton Seoul. Although both hotels may not be comparable, Nine Tree Premier Hotel is indeed strategically located at the heart of the tourist attraction, riding on the recovery of tourism post the pandemic. Compared to some transactions in 2022 which ranges at KRW370k to KRW480k per key, the acquisition price appears to be at the lower end of the range despite Nine Tree Premier Hotel is a bigger and possibly newer hotel. City Dev has been redeploying its divestment proceeds since 2022. This is the second hotel acquisition in 2023 and possibly the 6th major asset acquisition to redeploy its proceeds from the asset realisation in 2021 / 2022 of a total of c.S$3bn of proceeds, mainly from the divestment of Millennium Hilton Seoul of S$1.3b. Thus far, City Dev has redeployed c.S$1.6b (including the Nine Tree Premier Hotel acquisition), please refer to the table below. We believe prudent acquisition, taking opportunity of declining asset valuation environment could bode well for City Dev in the medium term. Maintain BUY; TP of S$10.50
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UOL ($6.39, down 12 cents) announced that it has entered into a sale and purchase agreement to dispose it’s Parkroyal Kitchener Hotel (PKH). The Completion Amount will be determined based on the Adjusted Net Asset Value of PKH at a specified time prior to the Completion Date. The adjusted NAV of PKH stands at S$525,000,000 and UOL reports that this disposal provides a good opportunity for the Group to unlock the value of its investment in PKH at an attractive price, and is part of the Group’s reconstitution of its overall property portfolio. UOL’s market cap stands at S$5.4bln and currently trades at 15x forward PE and 0.5x PB, with a dividend yield of 2.4%. Consensus target price stands at S$7.90, representing 24% upside from current share price. We maintain our Accumulate rating on UOL |
