| CGS CIMB |
CGS CIMB |
|
Malaysia Strategy One step at a time
■ One of two key catalysts we highlighted in June is taking shape while the expected capitulation in the US dollar has unfortunately not yet materialised. ■ In this note, we discuss market implications of policy clarity and continuity, something that has been notably absent since 2018. ■ We make three upgrades and one downgrade to our sector recommendations and four changes to our top picks list of 20 stocks.
|
KCE Electronics A new dawn in 2H23F
■ We believe the operating environment is more favourable for KCE on the back of 1) lower material costs, 2) lower electricity costs and 3) weaker THB/US$. ■ On top of cost tailwinds, we also project capacity utilisation to increase from 78% in 1H23 to 85-90% in 2H23F as customers’ restocking demand kicks in.
|
|
UOB KAYHIAN |
UOB KAYHIAN |
|
REITs – Singapore Bond Yields Being Held Hostage By Political Gridlock
We postulate that the recent spike in US government bond yields is caused by concerns over a prolonged government shutdown, rather than consensus view of higher inflation. Government bond yields could remain elevated till mid-November. We see opportunities to accumulate CLAS (Target: S$1.27), FEHT (Target: S$0.71), FLT (Target: S$1.47), KREIT (Target: S$1.08), LREIT (Target: S$0.79) and MINT (Target: S$2.74) on current weakness. Maintain OVERWEIGHT.
|
Shipping And Ports – China Outlook Still Largely Cautious Despite Some Early Signs Of Stabilisation
Most recent economic indicators still indicate a cautious near-term outlook for global trade despite some signs of stabilisation. For container shipping, freight rates have retraced after a short-lived rebound between July and mid-August, implying earnings pressure for container shipping plays in 2H23. For ports, overall container volume of Chinese ports has been largely stable with low-to-mid single-digit growth ytd. Maintain MARKET WEIGHT given the sector’s cheap valuation. Top picks: CSP and CSH.
|
|
LIM & TAN |
MAYBANK KIM ENG |
|
Tiong Woon / TWC ($0.48, down 0.5 cent) released their annual report yesterday and we highlight the following: TWC has achieved double-digit revenue and profit growth for the year despite a challenging business environment. Following the progressive resumption of economic activities, reopening of borders as well as the gradual emergence from supply chain disruptions and project delays post-pandemic, the Group benefited from strong customer demand, and delivered robust performance for the financial year ended 30 June 2023 (“FY2023”).i TWC’s market cap stands at S$112 million and currently trades at 6.2x Forward PE, 0.4x P/B ratio and 2.5x EV/EBITDA ratio and 2.1% dividend yield. We like that TWC is doing well in both locally and abroad with strong construction fundamentals, in line with the construction sector as evidenced by its peer’s profits and share price. We also like that management has increased doubled their dividends to 1 cent per share, faster than their profit growth of 40%, and this should also increase in the year ahead when TWC starts to mark contributions from their higher-margined heavy haulage business in India, Thailand and Saudi. As such, we think TWC remains a laggard play with a good risk-to-reward ratio due to its undemanding valuations and we thus maintain an “Accumulate” rating on TWC.
|
Raffles Medical Group (RFMD SP) Seeking new growth drivers
Acquires Ho Chi Minh City hospital; maintain BUY RFMD is acquiring a majority interest in American International Hospital (AIH, not listed) in Ho Chi Minh City for up to USD45.6m, to be fully funded by internal resources. The consideration took into account the valuation of the hospital asset by Savills Vietnam in Jul 2023. This follows a strategic partnership agreement it entered with My My Trading Services Company (not listed). Meanwhile, RFMD extended its contract to provide medical services at Connect@Changi as a TCF/CTF until Feb 2025. Maintain BUY and a DCF-based TP of SGD1.65 (LTG: 3%, COE: 8%).
|
