buysellhold july.23



Sea (SE US)

Recent Developments Are Positive For The Company


We reiterate BUY on SEA amid the recent positive developments. The revised Regulation of Minister of Trade in Indonesia favours Shopee's competitive standing, while Garena's Free Fire re-entry into the Indian market (which previously accounted for 10% of its monthly active users) signals additional growth avenues. We believe there is room for share price to re-rate further, primarily due to lower-than-anticipated sales and marketing costs. Target price remains at US$94.34.


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Automobile – China

Weekly: China’s PEV Sales Growth Accelerates To 40% During 18-24 Sep 23


China’s PEV retail sales growth accelerated to 40% yoy in the third week of September, driven by seasonality and stimulus measures. CPCA estimates Sep 23 PEV sales at 750,000 units (+22.7% yoy/+7.4% mom), in line with expectations. The top EV companies in China jointly saw 7% mom and 17% wow growth in insurance registrations. BYD’s insurance registrations grew 19.8% mom/20.7% wow to 64,700 units during 18-24 Sep 23, hitting a record high. Maintain UNDERWEIGHT. Top picks: BYD, CATL and Li Auto. 



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We highlight excerpts from Wing Tai’s (S$1.39, up 1 cent) latest annual report:

The Property Price Index (PPI) increased by 3.8% in the third quarter of 2022, followed by a slight increase of 0.4% to 188.6 in the fourth quarter of 2022. The upward trend continued in the first quarter of 2023, with PPI rising by 3.3% to 194.8. PPI decreased by 0.2% in the second quarter to 194.4. According to statistics by the Urban Redevelopment Authority (URA), sales of new residential units in 2022 declined by 45.5% to 7,099 units, compared to 13,027 units sold in 2021. In the first half of 2023, developers sold 3,383 new homes, 19.9% lower than the first half of 2022.

Joint venture brand UNIQLO continued to expand its footprint in both markets, operating a total of 28 stores in Singapore and 54 stores in Malaysia as at 30 June 2023. A staple brand in both markets, sales performance and growth in physical stores continued to improve.

At S$1.39, Wing Tai Holdings is capitalized at S$1.06bln with a P/B of 0.34x (close to Mar’20 levels during Covid-19). Dividend yield stands at 3.6%. While a huge portion of its decrease in profits for FY23 is due to fair value losses of its investment properties, we note that these losses are non-cash in nature and core business profit has been in line with expectations. The Group continues to see higher profitability from its Uniqlo JVs in Singapore and Malaysia with strong demand as one of the favourite consumer apparel brands in Southeast Asia. We maintain an “Accumulate” on Wing Tai.


City Developments

Diversifying into Tokyo PRS sector


■ CIT announced its largest private rental sector (PRS) transaction in Japan to date, increasing its Japan PRS exposure to S$644m.

■ We expect the deal to be earnings accretive, given the low funding cost in Japan.

■ Reiterate Add rating, with an unchanged TP of S$8.97 (45% discount to RNAV).



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Berjaya Food Berhad

Margins set to rebound; upgrade to Add


■ We upgrade BFood to Add from Reduce with a higher GGM-based TP of RM1.00 as earnings are set to improve on higher sales and margin recovery.

■ Key re-rating catalysts: i) robust store expansion to drive sales growth, ii) margin expansion as input costs ease from 2HFY24F, iii) rebound in tourism.

■ We switch to GGM model (prev. 12x CY24F P/E) to better reflect future profitability – 21% ROE, 9.5% COE, 4% long-term growth. 



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Sunway (SWB MK)

Building Batu Kawan Industrial Park 2.0


New industrial park in Penang We are positive on Sunway’s latest JDA in the Batu Kawan area, Penang mainland, as it allows Sunway to tap into the current strong demand for industrial properties in Penang. Additionally, the new industrial park will help Sunway diversify its revenue base and expand its exposure in the industrial property segment. The project, which has an e.GDV of MYR3.5b, should start contributing to the bottom line by 2026 onwards. We maintain our earnings forecasts, MYR1.92 TP (0.8x FY24E PBV) and HOLD rating.



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