| UOB KAYHIAN |
UOB KAYHIAN |
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REITs – Singapore 3Q23: CLAR (In Line); 9M23: PREIT (In Line)
BUY CLAR (Target: S$3.13) for excellence in execution to sustain strong positive rental reversion, maintain high occupancies and orchestrate a string of successive redevelopment projects. BUY PREIT (Target: S$4.19) for rent step-up of 25.3% for Singapore hospitals in 2026 after upgrading MEH to a modern and integrated multiservice medical hub. Maintain OVERWEIGHT on S-REITs.
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Sheng Siong Group (SSG SP) 3Q23: Results In Line; Opportunities Arise With Steady Supply Of HDB Projects
SSG’s 3Q23 net profit of S$34.8m (+5.7% yoy) was in line with expectations, with 9M23 forming 72.9% of our full-year estimate. 3Q23 revenue rose 3.7% yoy, due to higher contributions from new stores and stronger comparable same-store sales. SSG also recorded slight improvements in its margins, driven by an improved sales mix. We are of the view that demand will remain resilient in the rising inflationary environment. Maintain BUY. Target price: S$1.97.
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UOB KAYHIAN |
LIM & TAN |
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Hotel – Thailand 3Q23 Results Preview: RevPar Of All Hotel Operators To Normalise To 2019’s Levels
The combined profit of hotel stocks was Bt2.9b (+43% yoy, -14% qoq), dragged down by global plays (MINT). Meanwhile, the earnings of domestic plays improved qoq, with CENTEL improving the most, followed by ERW and AWC. Looking ahead, the earnings of domestic plays should continue to rise, thanks to a seasonal impact and supportive policies. Our top picks are ERW and CENTEL. MARKET WEIGHT on the sector.
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Bloomberg reported that Singapore’s financial regulator banned DBS Group Holdings Ltd / DBS ($33.03, up 0.18) from acquiring new business ventures for six months and the bank will hold senior management accountable after a spate of digital banking service outages. The changes will ensure that the bank focuses on restoring the resilience of its digital banking services, the Monetary Authority of Singapore said in a statement Wednesday. The actions followed repeated and prolonged disruptions of DBS’ banking services this year, including just last month. The MAS also barred Southeast Asia’s largest bank from paring local branch and ATM networks during the period. Since early 2022, the regulator has imposed penalties on DBS including higher capital requirements totaling S$1.6 billion for similar service disruptions. “Senior management will be held accountable, and this will be reflected in their compensation,” DBS Chairman Peter Seah said in a statement.
MAS’s directive to prevent DBS from making any acquisitions over the next 6 months and not allow the bank to reduce ATM or bank branches for 6 months is a relief. We believe that while IT and compliance costs will likely increase for DBS, it would not detract from their ability to capitalize on the higher for longer rate environment. We maintain our “Accumulate” rating as we see possibility of upside in dividend payments (48 cents/quarter) and also potential special dividends from the $3billion in excess capital. Valuations are reasonable at 8.5x PE and normalized dividend yield 5.8%. |
| LIM & TAN | |
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Frasers Logistics & Commercial Trust ($1.04, unchanged) reported revenue of S$212.8 million and Adjusted Net Property Income of S$155.5 million for 2HFY23, representing decreases of 0.8% and 4.0% respectively, from S$214.5 million and S$162.1 million in the second half of FY2022 (“2HFY22”).
FLCT’s market cap stands at S$3.9bln and currently trades at 21x forward PE and 0.82x P/B, with a dividend yield of 6.8% and gearing of 30.2%. The Bloomberg consensus target price stands at S$1.35, representing 30% upside from current share price. While upside looks attractive, the REIT sector continues to face headwinds such as higher for longer interest rates, inflationary cost pressures and also demand issues due to macro-economic weaknesses.
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