buysellhold july.23



Silverlake Axis Ltd

Riding on new product cycles


 4Q23 earnings of RM36.4mn were below our estimates. FY23 earnings were at 87% of our FY23e. The 24% YoY dip in earnings came from lower-than-expected project-related revenue and higher-than-expected tax expense. FY23 DPS was 14% lower YoY at 0.60 cents.

 4Q23e recurring revenue comprising maintenance and enhancement services, insurance ecosystem transactions and services, and retail transactions processing revenue grew 7% YoY, while project-related revenue comprising software licensing and software project services fell 4% YoY. Orderbook is RM665mn.



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CapitaLand Ascott Trust (CLAS SP)

Growing Through Accretive Acquisitions And Asset Enhancements


The acquisition of The Cavendish in London, Temple Bar Hotel in Dublin and Ascott Kuningan in Jakarta is accretive to pro forma DPU by 1.8% (excluding milestone payment of S$94.6m and positive impact from AEI for The Cavendish and Novotel Sydney Central). CLAS will rebrand The Cavendish under the luxurious The Crest Collection and build a 72-room extension at Novotel Sydney Central. CLAS provides 2023 distribution yield of 6.1%. Maintain BUY. Target price: S$1.31.



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China Merchants Bank (3968 HK)

1H23: Reduced Provisions Cushion NIM Pressure And Weakening Fee Income


CMB’s 1H23 earnings came in above our expectations, underpinned by lower provisions. Net interest income recorded a margin growth of 1.2% yoy as larger loan scale offset the NIM compression impact. Non-interest income remains a key drag on operating income due to the sluggish performance in wealth management income. Asset quality remains largely stable with the property risk exposure reaching its peak. Maintain BUY on CMB with a lower target price of HK$50.00.



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Awaiting clearer signs of recovery


■ 2Q23 core net profit flat yoy with revenue growth offset by weaker margins. TDCX’s lowered its FY23F revenue guidance which implies a weaker 2H23F.

■ Revenue diversification taking shape with rapidly growing contribution from new clients; TDCX sees green shoots of recovery for FY24F.

■ Valuation undemanding at 3.4x FY24F EV/EBITDA but we see limited nearterm catalysts with the pace of earnings recovery uncertain. Reiterate Hold. 



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Civmec Ltd’s ($0.815, up 0.02) didn’t disappoint with final dividend rising 50% to AUD 3 cents from last year’s AUD 2 cents, bringing full year dividend to AUD 5 cents/share, representing a payout ratio of 44%, up from 30% last year. Dividend yield at its last traded price is 5.6%. Full year profit rose 14% yoy to $57.7mln, coming in ahead of expectations of $56mln.

For the twelve months ended 30 June 2023 (“FY2023”) revenue increased 2.7% to A$830.9mln from A$809.3mln due to the timing of revenue recognition on projects. Gross profit for FY2023 increased 20.2% to A$109.2mln from A$90.8mln in FY2022 reflecting the increase in revenue and improvement in gross profit margins from 11.2 % to 13.1%. Other income for FY2023 decreased by 9.9% to A$2.6mln from A$2.9mln in FY2022 mainly due to the larger fair value gain on an investment property realised in FY2022 partially offset by the increase in interest income in FY2023. Administration expenses for FY2023 increased by 22.7% compared to FY2022 mainly due to an increase in employee benefits, marketing and tendering costs, and consultant fees.

We remain cautiously optimistic of the strong prospects of Civmec given its strong order books from its 3 different business divisions which provides strong business visibility. At 81.5 cents, Civmec is capitalized at $411mln and trades at undemanding PE of 8x, dividend yield of 5.6% and price to book of 1x against ROE of 15%. Bloomberg consensus 1 year target price of $1.23 implies potential upside of 50%. We thus remain sanguine of Civmec’s prospects and outlook.


Grand Banks Yachts / GBY (S$0.31, unchanged) proposed a final dividend of 1.0 Singapore cent per ordinary share for the year ended 30 June 2023 (“FY2023”), after reporting its highest net profit and revenue in more than ten years of S$10.1mln and S$114.2mln, respectively.

The builder of the prestigious Grand Banks, Eastbay, and Palm Beach brands closed its eighth consecutive profitable year, with FY2023 net profit after tax rising more than 2.5 times from S$4.0mln in FY2022

At S$0.31, GBY is capitalized at S$57.2mln and trades at 5.7x P/E and 0.8x P/B. Dividends have doubled to 1.0 S cts (FY22: 0.5 S cts), representing a 3.2% dividend yield. GBY’s results have been a positive surprise and exceeded our expectations with full year revenue and earnings above our forecasts by 14%/12%.

We see positives in its 1) resilient order book of S$159.4mln which provides revenue visibility for 1-2 years, 2) margins expansion to mitigate inflationary pressures, 3) net cash position of S$35.4mln in this current economic climate, and 4) capacity expansion to bring in more orders and long-term growth. We remain cautiously optimistic on the long term growth prospects of GBY

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