buysellhold july.23



Silverlake Axis Ltd

Earnings hurt by project-related revenue


 1QFY24 earnings of RM48.9mn were slightly above our estimates. 1QFY24 earnings were at 27% of our FY24e. The 15% YoY dip in earnings came from lower-than-expected project-related revenue and higher-than-expected OPEX.

 1QFY24 recurring revenue comprising maintenance and enhancement services, insurance ecosystem transactions and services, and retail transactions processing revenue grew 12% YoY, while project-related revenue comprising software licensing and software project services fell 12% YoY. Orderbook is RM720mn-730mn with the total deals pipelineat RM1.8bn.One new Indonesian bank secured for SIBS with two potential new banks to be secured in FY24.



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Delfi (DELFI SP)

3Q23: Resilient Growth Amid Rising Costs Brings Relief


Delfi’s 9M23 profit of US$32.8m (+22.1% yoy) was in line with expectations, forming 69.8% of our full-year forecast. The strong 15.2% yoy revenue growth was supported by double-digit growth in both Indonesia’s and regional markets’ sales. Delfi’s 3Q23 and 9M23 performances evinced management’s success in building its brands and strengthening its distribution network. Maintain BUY with a 4% lower PE-based target price of SS$1.76 (S$1.83 previously). 



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Commodities – China

Weekly: Metal Prices Rebounded On Easing Fed Rate Hike Fears; Industrial Metals And Iron Ore Prices Rising On Stimulus Optimism


The US’ weaker-than-expected Oct 23 CPI has eased market concerns of further rate hikes by the Fed, dragging the US dollar to a two-month low. Expectations of more stimulus measures from China are boosting demand outlook for industrial metals and iron ore. Steel mills’ margins expansion continued on the rebound of steel prices, though consumption has slowed. Cement shipment slowed as the northern region entered the low season and the southern region encountered rainy weather.



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Xiaomi Corp (1810 HK)

3Q23: Another Beat On Solid Execution


Xiaomi’s 3Q23 results beat expectations, with adjusted net profit 20% above our and consensus estimates on the back of better-than-expected margins for its smartphone business. The recovery in consumer spending is on track, and the implementation of AI in smartphones can bolster replacement demand going forward. Maintain BUY. Raise target price to HK$21.60 as we factor in the EV business’ valuation.



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Keppel Corporation ($6.43, down 0.04), through its Infrastructure Division (Keppel), has launched a multi-pronged project for the National University of Singapore (NUS), aimed at advancing its Campus Sustainability Roadmap 2030 and the Singapore Green Plan 2030. Under the Master Research Collaboration Agreement (MRCA) signed by Keppel and NUS in April 2022, the University’s Kent Ridge campus will serve as a low-carbon living laboratory to create, test-bed and scale commercially viable climate technologies and sustainability-related innovation. 

To this end, Keppel and NUS will implement a digital twin, leveraging comprehensive sensing technologies and modelling and a novel AC/ DC hybrid microgrid that will seamlessly integrate different onsite and remote renewable energy resources, energy storage technologies, and smart electric vehicle charging solutions. These innovations are envisaged to create an infrastructure network that reduces energy consumption while enhancing grid reliability and climate resilience.

Keppel’s head-start in the ESG space would position them well with the strategies of global governmental organizations and we believe it would future-proof their business going forward. We maintain Accumulate rating on Keppel given its attractive 17% potential upside to consensus target price of $7.52 and over 5% dividend yields (not counting specials such as distribution in species of Keppel REIT and Semb Marine).

DXN Holdings (DXN MK)

Visiting DXN China


BUY maintained, TP unchanged at MYR0.90

We came away from our recent visit to DXN’s Ningxia, China manufacturing facility feeling positive. This is premised on the group’s clear strategies in pursuing new markets in China for longer-term growth, strong product innovation for export markets and use of automation in its production lines to minimise cross contamination and its reliance on labour. Our earnings estimates, BUY call and TP of MYR0.90 (on 11x FY24E PER) are unchanged.



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