buysellhold july.23



Singapore Banking Monthly

Rates stable and CASA stable


 August’s 3M-SORA was up 1bps MoM to 3.69% and 3M-HIBOR was down 12bps MoM to 4.98%.

 Singapore domestic loans dipped 6.15% YoY in July, belowour estimates. The loan decline has slightly increased from the previous month. The CASA balance was flat at 18.9% (Jun23: 18.9%).

 Maintain OVERWEIGHT. We remain positive on banks. Bank dividend yields are attractive at 5.7% with upside surprise in dividends due to excess capital ratios and push towards higher ROEs. SGX is another major beneficiary of higher interest rates (SGX SP, BUY, TP S$11.71).



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Raffles Medical Group (RFMD SP)

Margins To Compress; No Updates On TCF Tender


With RFMD’s reclassification of its healthcare services and insurance services segments, we still see healthy segmental margins, driven by cost savings and the TCF. However, we expect increasing manpower costs to drag margins for 2H23. The result for the TCF tender in the west of Singapore has not been announced but we see potential upside to our earnings estimates if RFMD wins any of the three upcoming TCF tenders. Maintain BUY with an unchanged target price of S$1.70.



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Banking – Malaysia

Lacking Fresh Catalysts


The sector delivered a robust earnings growth of 17% yoy in 2Q23 on lower tax, provisions, and strong non-interest income growth. However, with sector valuations near historical mean and earnings expected to trail the FBMKLCI, we see a fair risk-toreward balance given the absence of new catalysts. In 2024, we anticipate stable NIM and slowing loan growth. Maintain MARKET WEIGHT. Our two sector top picks are CIMB and Public Bank.



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Del Monte / DMPL ($0.158, up 0.2 cent) released its 1QFY2024 results ending July and reported that it generated sales of US$516.7mln, up 13% with better sales in USA and fresh pineapple exports. Philippines sales were higher in peso terms but flat in US dollar terms with the strengthening of the latter. The Group’s U.S. subsidiary, Del Monte Foods Inc. (DMFI), achieved sales of US$356.4mln or 69% of Group turnover. DMFI’s volume grew by 5% while sales improved by 18% driven by pricing actions and strong growth and development of the company’s branded product portfolio in both traditional and emerging channels.

Fresh sales saw strong expansion, up 23%, driven by increased sales of premium higher-margin S&W Deluxe fresh pineapples as well as better pricing. S&W, along with its major distributor partner, held the first ever S&W Pineapple Festival in China covering more than 300 retail stores and 9 wholesale markets to communicate S&W’s strong commitment to the Chinese market and showcase its innovative products. S&W Deluxe fresh pineapple was also launched for the first time in select retail outlets in Metro Manila. S&W Frozen Pineapple Stick for consumption as a popsicle was recently launched in 7-Eleven Taiwan. It is now available in 3,400 stores. 

Del Monte’s market cap stands at $307.1mln and currently trades at 4.5x forward PE and 0.7x PB, with a dividend yield of 1.1%. Consensus target price stands at $0.40, representing a 153% upside in current share price.



Sheng Siong Group

On stable footing


■ We hosted Sheng Siong’s CEO Mr. Lim Hock Chee and Financial Controller Mr. Bobby Fan at our CGS-CIMB Consumer Virtual Conference today.

■ Competitive intensity remains healthy in SG despite a higher frequency of promotions, but store openings YTD have been slower than our expectations.

■ SSG intends to secure more new store leases and build a new DC in SG to support growth locally. Disciplined approach to China expansion. Stay Add. 



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Monde Nissin Corp

Sustained margin improvement in 2H23F


■ 1H23 core net income fell 14.1% yoy to Php3.5bn, in line with our and Bloomberg consensus. 1H23 revenues rose 5.4% yoy to Php39.2bn.

■ We cut our FY24F GPM/EPS estimates by -18bp/-1.0% to 35.5%/Php0.4, as we expect persistent cost pressures next year.

■ Reiterate Add, with a lower DCF-based TP of Php9.86. Downside risks: increased volatility in key commodity prices, and stalled recovery of MAB



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