|LIM & TAN
MAYBANK KIM ENG
City Developments Limited ($6.21, down 7 cents) announced operational updates for 3Q23 and noted that the Group and its joint venture (JV) associates sold 183 units with a total sales value of $325 million (Q3 2022: 95 units with a total sales value of $281 million). Sales were largely driven by the launch of The Myst in July.
CDL’s market cap stands at S$5.6bln and currently trades at 17.6x forward PE and 0.6x PB, with a FY24 dividend yield of 2.3% and gearing of 58%. Consensus target price stands at S$7.95, representing 28.0% upside from current share price. While developmental earnings might be slower as a result of higher interest rates and newer supplies, we expect its hospitality sector to continue recovering. As such, we maintain an Accumulate rating on CDL.
Frencken Group Ltd (FRKN SP)
Rock bottom hit: recovery on track
Maintain BUY with higher TP of SGD1.39 Frencken reported a positive 3Q23, with PATMI at SGD7.1m, down 35.3% YoY but up 2.9% QoQ, slightly ahead of our expectation. So far, Frencken has delivered improving quarters since 1Q23 and we believe this trend is likely to persist. We think its Malaysia factory utilisation should continue to benefit from its key customer shifting some production from Europe to Malaysia and FY24E should be a much better year. We raise our TP to SGD1.39 from SGD1.27 as we peg to a higher 12x from 11x FY24E P/E.
MAYBANK KIM ENG
Genting Bhd (GENT MK)
Best quarterly result in years
Maintain BUY call with higher TP of MYR5.49 (+2%) Results handily beat our expectations on better-than-expected RWS VIP volume and Meizhou Wan contributions. In fact, 3Q23 core net profit was the highest since 4Q19. Going forward, we believe that the earnings outlook for GENT’s major segments is bright. RWLV also appears to have found its footing with another record EBITDA of USD52m in 3Q23. We raise FY23E/FY24E/FY25E EPS for GENT by 37%/15%/11% and our SOP-TP to MYR5.49 from MYR5.36. Maintain BUY.
Resilient spirits performance
■ FY9/23 core PATMI declined 9% yoy, a miss. Key drags were weaker beer sales performance in Vietnam and lower share of profits from associate FPL.
■ Sprits sales volume was resilient in 4QFY23. We see further upside for brown spirits sales and expect spirits segment to drive FY24F EPS growth.
■ Beer segment sales could remain lacklustre in FY24F, but we think this can be offset by lower input costs and disciplined SG&A spend. Reiterate Add.
A resilient 3Q23
■ CIT’s operations showed resilience across all segments in 3Q23.
■ CIT sold 691 new homes in 9M23 and plans to launch two projects in 1H24F.
■ Maintain Add with an unchanged TP of S$8.97.
3Q23 update highlights
While no financial numbers were shared, CIT’s 3Q23 business update showed resilience in its operations across all segments during the quarter. The group’s net debt to equity ratio (after factoring in fair value on investment properties) stood at 0.58x at end-3Q, while interest cover was 3.2x. In Nov 2023, CIT announced its proposal to buy back up to 10% of its preference shares through an off-market equal access scheme, to strengthen its capital structure. Each preference shareholder is entitled to sell 10% of its preference share holding at S$0.78 in cash for each preference share. The offer is expected to be completed by Dec 2023 and CIT indicated it plans to cancel any preference share purchased to reduce finance costs of the coupon payment of the shares.
Frencken Group Ltd
Most segments’ revenue to grow hoh in 2H23F
■ 3Q23 revenue of S$184.4m (-5.6% yoy) was in line at 104.3% of our S$176.8m forecast.
■ 3Q23 net profit of S$7.1m (-35.3% yoy) was 18.3% above our S$6.0m expectation due to better-than-expected gross and net profit margin.
■ Reiterate Add call on Frencken as we expect the semicon industry to recover over 2024-25F.