| PHILLIP SECURITIES |
CGS CIMB |
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Keppel Corporation Ltd Stable energy sales, weak real estate markets
3Q23 revenue fell 6.0% YoY, dragged lower by weak property sales in China and India, after the rebound in 1H. 3Q23 net profit was higher YoY, but no financial detail was provided. The distribution-in-specie of 1 KREIT unit for every 5 Keppel shares has been approved by shareholders. This is equivalent to S$0.18 per Keppel share. Upgrade to BUY due to recent price correction. We maintain our earnings projections. After accounting for the KREIT distribution, our TP is revised lower to S$7.52 (prev. S$7.70).
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Hyphens Pharma International Displaying appetite for growth
■ HYP announced the acquisition of the remaining 58% stake in associate Ardence across three tranches, to be fully completed earliest by FY26F. ■ The first tranche will see HYP’s stake increase by 23% for a consideration of S$1.9m, fully funded by cash out of HYP’s net cash of S$28.6m as of 1H23. ■ We view the deal favourably as we see Ardence as a strategic asset to grow HYP’s medical aesthetics business. Reiterate Add; unchanged TP of S$0.34.
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CGS CIMB |
UOB KAYHIAN |
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Land Transport - Overall A surprise move by Gojek
■ From 1 Nov, Gojek will lower driver commission rates from 15% to 10%, but a payment fee of 10-60 cents is introduced for consumers’ non-cash payments. ■ We think Gojek’s driver shortage is more severe vs. peers. Limited impact on peers unless Gojek resumes aggressive incentives to gain market share. ■ We remain optimistic that Singapore P2P players’ profitability could further improve for the remainder of CY23F. Grab is our sector top pick.
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Raffles Medical Group (RFMD SP) Entering Vietnam; Inflection Point Remains To Be Seen
RFMD announced its expansion into Vietnam through a majority stake acquisition in a hospital. Its Changi TCF has also been extended till Feb 25. However, the reveal of TCF unit prices was lower than expected. Moving forward, the healthcare services segment is expected to face lower margins while a persistently strong Singapore dollar would drag the hospital services segment’s recovery. Maintain BUY but with a lower target price of S$1.47..
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| LIM & TAN | LIM & TAN |
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Suntec REIT ($1.12, down 0.02) reports distributable income of S$52.0 million for the period from 1 July to 30 September 2023 (“3Q 23”), 3.6% higher than the quarter ended 30 June 2023 (“2Q 23”), but 13.3% lower than the quarter ended 30 September 2022 (“3Q 22”). Distribution per unit (“DPU”) of 1.793 cents to unitholders for 3Q 23 was 3.1% higher than 2Q 23 but 14.0% lower year-on-year.
Operational performance of the office, retail and convention properties continued to improve. However, higher financing costs and the weaker Australian dollar against the Singapore dollar impacted the distributable income. On the Environmental, Social and Governance (ESG) front, Suntec REIT has attained the highest GRESB 5 Star rating for the fourth consecutive year since its inaugural participation in 2020. Suntec REIT was also awarded an ‘A’ for its public disclosure.
Comments: The challenging outlook from higher for longer interest rates as well as headwinds from weaker demand conditions and inflationary cost pressures have seen Suntec REIT’s share price underperform the market for this year by falling near 19% on a year to date basis compared to the market’s flattish performance. The 19% YTD share price decline interestingly reflects consensus estimated 20% yoy decline in DPU for this year to 7.16 cents, implying a forward dividend yield of 6.4%. While valuations look undemanding at 0.5x book, 6.4% dividend yield and potential upside of 13% upside to consensus 1 year target price of $1.27, we continue to remain NEUTRAL on Suntec REIT given the continued headwinds such as higher for longer interest rates, inflationary costs pressures and weakening demand conditions due to the potential global slowdown as warned by the IMF and World Bank recently
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Yangzijiang Financial Holding Ltd / YZJFH ($0.34, up 0.01) a Singaporeincorporated financial company engaged in the businesses of investment management, and the provision of wealth management and fund management services, would like to announce changes in the structure of its management team, following the impending departure of its Chief Executive Officer (CEO) Mr Vincent Toe. Mr Toe will be leaving the organisation to pursue other opportunities in six months’ time, being 24 April 2024 (“Effective Date”). Mr Toe will remain at the helm for the next six months to provide continuity during the transition period and ensure the smooth running of the Group’s operations. With a succession and transition plan in place, Mr Toe’s departure on the Effective Date is not expected to impact the Group’s day-today operations. With Mr Toe’s impending departure and as part of the streamlining process, the Group has made the following strategic decisions that will take place on the Effective Date. The roles of (i) Chief Investment Officer – PRC and (ii) Chief Investment Officer – Singapore will be removed. The Group’s Executive Chairman, Mr Ren Yuanlin, will further assume the role of CEO on the Effective Date, and will assume the responsibility of overseeing the Group’s investments, including sourcing, executing, managing and monitoring of the Group’s investments, both in the PRC and Singapore, which are currently being undertaken by the Chief Investment Officer – PRC and Chief Investment Officer – Singapore. Comments: While Mr Vincent Toe’s resignation coming at a time of global equity weakness does not help sentiments, we are comforted by the continuality plans put in place for Chairman Ren to take over the Chief Executive role from Mr Toe and also for Ms Liu Hua, the current CFO to step up into the deputy CEO role to bolster confidence that all is well in the business fundamentals and financials of the company. The 6 months handing over period is also important for investors to take comfort that there is continuity and accountability in the handing over process. Valuations of YZJFH is not demanding at 0.3x price to book, 4x consensus forward PE and about 10% dividend yield based on consensus estimates. Based on Bloomberg consensus target price of 55 cents, potential upside from its last traded price of 34 cents is about 62%. |
