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UOB KAYHIAN |
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Frencken Group (FRKN SP) Expect 2024 To Be A Recovery Year; Maintain BUY With A 23% Higher Target Price
Frencken’s semiconductor segment is expected to recover in 2024, backed by an improvement in semiconductor fab equipment spending and the recent increase in revenue guidance by its key customers. Frencken’s earnings appear to have bottomed in 1H23, based on its latest guidance of a stable 2H23 vs 1H23, with only one out of five segments expected to show a revenue decline. We raise our target price by 23% to S$1.23 after raising our 2024 earnings forecast. Maintain BUY.
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Commodities – China Weekly: Israel-Hamas Conflict Boosts Safe-Haven Appeal
The Israel-Hamas conflict has boosted the appeal of safe-haven assets. Gold has pared some losses in the past few weeks amid a hawkish Fed. US’ Aug 23 nonfarm payroll came in well above expectations at +336,000. However, the weaker-than-expected wage growth of 0.2% mom could be a signal of decelerating inflation. Steel inventory was +6.7% wow and ended its seven consecutive weeks of downtrend. Steel’s apparent consumption and cement shipment was -15.2%/-8.6% wow during Golden Week holidays.
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UOB KAYHIAN |
LIM & TAN |
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Oil & Gas – Malaysia Volatile Oil Price And Risk Premium Towards 4Q23
The Israel-Hamas conflict may lead to more volatility in the form of a potential conflict extension to Iranian barrels (~2m bpd exports), which may be of material impact to oil prices, or a knee-jerk reaction as they can be absorbed by demand centres like China. While a bullish oil sentiment for 4Q23 was almost a certainty, future volatility is now greater depending on oil demand and transition pathways. We maintain sector OVERWEIGHT, but advise to be selective on companies that are nimble towards changes.
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SingTel (S$2.38, down 1 cent): KakaoBank, South Korea’s first and leading digital-only bank, and Superbank are excited to announce a strategic partnership that marks a significant milestone for both companies. In this strategic partnership, KakaoBank will acquire a 10% stake in Superbank through the issuance of new shares. Superbank is a new transitioning digital-focused bank in Indonesia backed by a consortium comprising Grab, Singtel and Emtek Group. The cross-selling opportunities are tremendous given the extremely wide reach of Singtel and Grab’s customer base. We thus remain sanguine about the medium-longer term growth potential of Singtel’s digital banking venture. At its last traded price of $2.38, Singtel is capitalized at $39.3 billion and trades at 15.2x forward PE, 5-6% forward dividend yields, 1.5x price to book. Bloomberg 1-year consensus target price of $3.09 implies a potential upside of 30%. We maintain our “Accumulate” rating on Singtel. |
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LIM & TAN |
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Keppel REIT ($0.83, unchanged) reported that global data, analytics and technology company Equifax has officially opened the doors to its new workplace at Blue & William in North Sydney, Australia. Located on the prime intersection of Blue and William streets, the 10-storey development is owned by Keppel REIT, with Lendlease as the development and investment manager. Equifax and Northbrew Café are the first occupants to be welcomed into the building, with other tenants, including global consulting firm, Human Synergistics, to follow in early 2024. Keppel REIT’s market cap stands at S$3.1bln and currently trades at 11.0x PE and 0.6x PB, with a dividend yield of 7%. Consensus target price stands at S$1.01, representing 21.7% upside from current share price.
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