buysellhold july.23




3Q23 results above our expectations


HOLD maintained

RHB’s 3Q23 results were above our expectations and we upgrade FY23/24/25E earnings by 4%/1%/3% respectively. We expect FY24 earnings growth to be relatively subdued, on the assumption that credit cost normalizes after the write-back of COVID overlays in 2Q23. We maintain our TP of MYR6.20 on an FY24E PBV of 0.8x (FY24E ROE: 9.1%). 



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Yangzijiang Financial Holdings

Management team intact


■ Chairman Ren to assume role as CEO, will increase his focus on SG and oversee overall investment operations. Business continuity ensured.

■ Investments outside PRC rose to 27% of total AUM in 3Q23 – quicker-thanexpected and in line with its 50% target over the longer term.

■ Reiterate Add with SOP-based TP of S$0.55 unchanged. Mgmt. is optimistic of property sector in PRC improving, giving stronger hope of NPL recoveries.



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Sembcorp Industries / SCI (S$5.12, down 1 cent) announced that it has signed two separate agreements to acquire a total of 428MW of wind assets in China and India.

Sembcorp’s wholly-owned subsidiary, Sembcorp Energy (Shanghai) Holding Co., Ltd, has signed an agreement with Envision Energy Co., Ltd to acquire 100% of the share capital in Qinzhou Yuanneng Wind Power Co., Ltd, (Qinzhou Yuanneng) for an equity consideration of approximately S$130 million. Qinzhou Yuanneng owns 200MW of operational wind assets in Guangxi, China.

Sembcorp Industries’ market cap stands at S$9.2bln and currently trades at trailing 12-mth PE of 10.3x and 2.0x PB, with a dividend yield of 1.8%. Consensus target price stands at S$6.64, representing a 29.7% upside from current share price.

We continue to like SCI’s transition away from “dirty” energy to “clean” energy as global governments and fund managers increase their focus on “Environmental, Social and Governance” considerations. We thus maintain our “Accumulate” recommendation on Sembcorp Industries.


ARA US Hospitality Trust / ARA H-Trust (US$0.285, down 0.005), through its indirectly wholly-owned subsidiary, ARA USH Chicago, LLC (the “Vendor”), has on 27 November 2023 (U.S. Time) entered into a conditional purchase and sale agreement (the “PSA”) with Bacall Companies, (the “Purchaser”), pursuant to which the Vendor has agreed to sell to the Purchaser, Hyatt Place Pittsburgh Airport (“HPPA”, the “Hotel” or the “Property”) (the “Proposed Sale”), for a consideration of US$7.7 million (the “Sale Consideration”), subject to closing adjustments in accordance with the PSA.


At US$0.235, ARA H-Trust is capitalized at US$221mln and trades at 0.3x price to book, 10x PE and 9% dividend yield. We note that while the sale makes strategic and financial sense for ARA H-Trust, there is little impact on their DPU and NAV given that the divestment is done near the fair value range of that indicated by the independent valuers. And the absolute amount is small compared to its asset size, NAV and market capitalization. We are thus “Neutral” on the sale announcement.


Hyphens Pharma International

Dented margins in 3Q23


■ Record-high revenue of S$42.8m in 3Q23 was overshadowed by a 47.2% yoy decline in PAT in 3Q23 as a result of a 4.8% pt GPM compression yoy.

■ In its announcement, HYP said inflationary pressures led to higher supply prices and operating costs, resulting in poorer profitability.

■ We maintain our Add call but lower our TP to S$0.32 as we think profitability will remain depressed in the near term amid difficulties in cost pass-through.



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Netlink NBN Trust

Finalised ICO pricing removes overhang


■ Revised ICO pricing for Netlink Trust slightly ahead of our expectations. New prices will take effect from 1 Apr 2024.

■ With strong cash generation, we believe NLT can sustain its DPU growth of 2% p.a., implying 6.5% yield (FY3/24F).

■ Reiterate Add with DDM-based TP of S$0.95.



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