buysellhold july.23



NetLink NBN Trust (NETLINK SP)

1HFY24: Stable Results, Upcoming IMDA Review Expected By End-3QFY24


Despite higher yoy revenue and EBITDA, 1HFY24 PATMI (-3.1% yoy) was just below our expectations, dragged by higher finance costs, and accounted for 44% of our full-year forecasts. The next regulatory review is expected to be completed by end-3QFY24 and implemented by 1QFY25. Given its stable revenue streams and operating cashflows, we continue to like Netlink as it is a high-yielding, safe haven stock. Maintain BUY with a lower target price of S$1.01.



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Raffles Medical Group (RFMD SP)

3Q23: Weaker Performance As Margin Pressure Builds


RFMD’s 3Q23 net profit fell to S$12.4m (-67.4% yoy) on the absence of COVID-19 related revenue, higher insurance claims and rising costs, missing our expectations. While its TCF at the Expo has been extended, we note that margins have been eroded due to competitive bidding. We expect margins to contract further as a result of gestation losses from its China operations, higher insurance claims and elevated operating costs. Downgrade to HOLD with a lower PE-based target price of S$1.15.



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SIA Engineering (SIE SP)

1HFY24: Results In Line; Strong Underlying Demand Driving Improving Earnings


SIAEC’s 1HFY24 net profit of S$59m (+83% yoy) is in line with our expectation, at 49% of our full-year forecast. Underlying demand for MRO services remained strong, although earnings of the engine and component division were still somewhat hindered by supply chain issues. We expect SIAEC’s earnings to continue to improve in 2HFY24 and FY25, driven by further air traffic recovery and strong MRO demand in the medium term. Maintain BUY with an unchanged target price of S$2.67.



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Sembcorp Industries (SCI SP)

Bigger, Bolder, Faster, Stronger


SCI’s Investor Day 2023 provided much positive information and fuel for thought. With its upgrade of renewables capacity targets, guidance for relatively stable baseload earnings from conventional energy, and blue sky option via hydrogen, ammonia and renewable energy imports, SCI looks well-placed to remain a key holding in investors’ portfolios in the long term. Maintain BUY. Target price: S$7.20. 



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Press Metal Aluminium Holdings (PMAH MK)

Navigating Supply Tightness And Demand Resurgence In 2024


While aluminium demand could remain soft in the rest of 2023, inventory supply is tightening on the back of the Russian metal ban and Chinese power cuts alongside high energy prices in Europe. An inflection point could be seen in 2024 driven by a demand recovery, the ongoing supply tightness and a reversal in the US interest rate cycle. Further impetus could be coming from a meaningful VAP contribution after its gestation period in 2023. Maintain BUY. Target price: RM5.50. 



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Tenaga Nasional (TNB MK)

Staying Nimble In Order To Achieve RP4 Green Targets


TNB is in the final submission phase for Regulatory Period 4. We expect TNB to incur higher capex in order to incorporate green infrastructure, and a base-case ROA of 7- 7.3%. While TNB has earmarked a whopping RM35b for green capex, we expect these to be backloaded over the next few regulatory periods. Balance sheet has improved thanks to easing coal prices and the government’s commitment towards subsidy rationalisation. TNB offers a 5% dividend yield. Maintain HOLD. Target price: RM10.40.



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