buysellhold july.23



ComfortDelGro Corp Ltd

Higher pricing supporting margins


 3Q23 normalised PATMI jumped 48% YoY to S$48mn and was within our expectations. Revenue was softer than expected. 9M23 revenue and PATMI were 73% and 78% of our FY23e forecast.

 Earnings growth was driven by a turnaround in the UK bus operation and growth in Singapore taxi operations. UK benefited from higher pricing through contract indexation and renewal. Singapore taxi margins expanded with platform fees.


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Oversea-Chinese Banking Corporation Limited / OCBC ($12.98, up 0.10) wishes to announce that its subsidiary, PT Bank OCBC NISP Tbk (“OCBC Indonesia”), has on 16 November 2023 entered into a Share Sale and Purchase Agreement (“SPA”) to acquire 99% of the issued ordinary shares in PT Bank Commonwealth (“PTBC”) from Commonwealth Bank of Australia. OCBC Indonesia also intends to acquire the remaining 1% of the issued ordinary shares in PTBC from the other shareholders. 

The Proposed Acquisition adds scale to OCBC Indonesia and deepens OCBC Bank’s presence in Indonesia. PTBC’s customer base of retail and small and medium-sized enterprise customers is complementary with OCBC Indonesia. As there is little overlap in customer relationships between OCBC Indonesia and PTBC, the Proposed Acquisition is expected to create synergies and strengthen the franchise value of OCBC Indonesia.

The acquisition is done at about 0.5x-0.6x price to book versus OCBC’s own 1.1x which we consider a bargain purchase. It is widely known that Indonesia is South East Asia’s largest and also fastest growing region. Key is the integration and execution which we believe given the smaller size, OCBC would have little trouble integrating the acquisition into its Indonesian operations. We maintain “Accumulate” on OCBC given its undemanding PE of 8x, yield of 6.2% and price to book of 1.1x.



Bumi Armada (BAB MK)

3Q23 results review: Kraken FPSO back in action!


3Q23 results beat! Maintain BUY

BArmada’s 3Q23 results came in above our expectations and with that, we raise our FY23E net profit forecast by 21% to account for higher Kraken FPSO uptime for the year while leaving FY24-25E estimates relatively unchanged. With its Kraken FPSO now fully up and running at pre-shutdown levels, we believe that the worst is now behind the group. Post-revision of our earnings estimate, our SOP-based TP is raised slightly to MYR0.71 (from MYR0.70 previously). Maintain BUY.



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3Q23: Earnings on track


Maintain HOLD

3Q23 earnings were within expectations with 9M23 core net profit at 73%/70% of our/consensus’ full year estimates. Revenue was mainly lifted by stronger pickup in the hotel segment with higher tourist arrivals. Earnings YoY however was offset by higher utilities and finance costs. No change to our earnings forecasts and DDM-TP of MYR1.54 (Ke: 8.4%, LTG: 1%). Maintain HOLD. For retail REIT, we prefer PREIT MK (BUY, CP: MYR1.22, TP: MYR1.41).



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Singapore REITs

High (not higher) for longer


  1. S-REITs to gain momentum as global yields retreat
  2. Operational metrics demonstrate strength while financial position is stable
  3. Our forecast of flattish FY24-25F DPU already adequately accounts for risks associated with elevated interest rates
  4. Which sub-sectors do we prefer?



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UMS Holdings

Positive read-through from key customer AMAT’s earnings/outlook

  • We think that the positives from key customer Applied Materials (AMAT’s) 4Q23 results beat and upbeat forecast should allay concerns over ongoing US probe
    • Both revenue and EPS for 4Q23 results/1Q24 outlook are above expectations, pointing to industry recovery
    • AMAT sees robust demand in 2024 led by higher PC, cloud, and AI data-centre spending
  • Any knee jerk reaction to UMS’ share price arising from the ongoing US probe may be an opportunity to add exposure to the stock, in view of improving fundamentals
    • Stronger recovery (EPS growth of 33%) expected in 2024F; ongoing trade diversification trend and completion of new Penang plant offers growth opportunities
    • Our analyst does not see a huge impact on UMS as it only accounts for a 1-2% of AMAT’s revenue unless its Endura system faces further restrictions
  • UMS remains our analyst’s top pick within the sector; we have a BUY call with TP S$1.55

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