buysellhold july.23



AEM Holdings (AEM SP)
Things have bottomed Better FY24E: Maintain BUY

AEM reported a weak 3Q23, mainly due to the USD20m settlement provision, but in line with our estimate. PBT for 9M23 would be SGD42.6m, excluding exceptional items. However, management has guided that it now sees a protracted recovery of tester utilization rates pushing main capex spend into late 2024. As a result, we reduce our FY24/25 PATMI forecasts by 24% and 10.6%, respectively.

With the worst over, we are bullish on the long-term key role that AEM plays in the testing space and believe it will benefit from a semi-conductor rebound in FY24. We maintain BUY with a slightly lower TP of SGD3.76 based on a higher blended 13.5x FY24/25E P/E to better reflect its true value.



CapitaLand Investment Limited

Growing recurring income streams


▪ 9M23 revenue of S$2.085bn (-3% YoY) was slightly below our estimates, forming 69% of our FY23e forecast.

▪ Fee-related revenue is on the rise, driven by a 31% increase in lodging management fees and a 9% growth in recurring fund management fees. However, this is offset by a significant decrease of 64% in event-driven fees. Including embedded funds under management (FUM) of S$10bn that is pending deployment, CLI has reached its 2024 FUM target of S$100bn. Total recurring income for 9M23 grew by 9% YoY.



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Oversea-Chinese Banking Corp Ltd

Higher NII and fee income raise profits


▪ 3Q23 earnings of S$1.81bn were slightly above our estimates. It came from higher net interest income and higher fee income offset by lower insurance income and higher allowances. 9M23 PATMI was 77% of our FY23e forecast.

▪ NII grew 17% YoY as NIM rose 21bps YoY to 2.27% and loan growth declined 2% YoY. Total non-interest income rose 4% YoY as higher fee income was offset by lower insurance income while trading income was flat. Allowances rose 19% due to higher SPs as credit costs increased 4bps YoY to 17bps. 



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Valuetronics Holdings Ltd

Returning to growth, trading around 90% cash


▪ 1H24 PATMI grew 42% YoY to HKD82.1mn, and above our expectations. Revenue and PATMI were 42%/62% of our FY24e estimates. Revenue decline was due to lower component prices. The company announced a special dividend of HKD4 cents in addition to interim HKD4 cents.

▪ Earnings growth was driven by (i) gross margin expansion from lower component prices and a weaker renminbi; (ii) an increase in interest income; and (iii) lower operating expenses, especially depreciation. 



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Singapore Telecommunications Ltd

Aggressively restructuring to reality


▪ 1H24 revenue and EBITDA were within our expectations at 46% of our FY24e forecast. EBITDA declined 5% YoY to S$1.78bn due to an 11% contraction in Optus earnings. Underlying net profit rose 11% to S$1.12bn despite a 4% point drag on currency.

▪ Singtel increased interim dividends by 13% to 5.2 cents and revised higher its payout ratio from 60-80% to 70-90%. A 3-year programme to remove S$600mn (of S$200mn p.a. FY24-26) of indirect cost was announced. 



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Record occupancy and robust outlet sales


• 3Q23 results were within expectations. 9M23 rental income in SGD/RMB terms was 75%/75% of our FY23e estimates. No change in SASSR’s FY23 guidance.

• Outlet sales in 3Q23 surged 15.8% to RMB1.1bn due to the success of a series of sales events. EMA rental income was lifted by 6.5% YoY in RMB terms. Depreciation of RMB by 8.2% YoY and higher financing cost continue being a drag for SASSR. 



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