buysellhold july.23



Keppel Corp (KEP SP)

The Force Is Strong With This One


Keppel’s acquisition of top-ranked Aermont Capital, which has a major European real estate presence, arguably puts the company into the league of global asset managers. This acquisition will deliver growth as well as investor and geographic diversification. How the combined entity takes advantage of the macro and real estate issues in Europe over the next five years will be worth watching. Maintain BUY. Target price: S$9.09.



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Manulife US REIT (MUST SP)

Breathing Space For Orderly Deleveraging


The success of MUST’s recapitalisation and deleveraging plan hinges on progress of divestments. Interest rates are expected to decline in 2H24, which make the environment more conducive for divestments. The first step towards revival is to obtain waiver from lenders. We forecast distributable income of US$46.6m and fully-diluted DPU of 1.2 US cents for 2026, the first year MUST resumes distribution. Valuation is attractive with 2026 distribution yield at 15.1% and P/NAV at 0.44x. Maintain BUY. Target price: US$0.13.



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Singapore Strategy

Reflections 2023


This year’s big themes are key opportunities for SG

2023 is the year experts got wrong. Forecasts on interest rates, inflation and valuations underwent big gyrations throughout the year. Yet amidst these macro deviations, we saw major thematic developments that could influence medium-term earnings and valuations across sectors. Key amongst these is the accelerated adoption of GenAI, coupled with rising demand for 5G and IoT. Separately, China’s economic re-opening was worse than expected. Yet it has created positive spill-overs for Singapore. Concurrently, armed with strong balance sheets, local corporates are fast expanding their regional footprints. Taken together, we think these developments could introduce new income streams and drive better efficiencies. Key winners: CD, DBS, FRKN, RFMD, SCI, Singtel, STE, VMS.



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Malaysia Airports (MAHB MK)

Recovery consolidating


Maintain BUY call and MYR7.96 DCF-TP 3Q23 results were within our expectations. The MYAirline fallout has been provided for and the third consultation paper relating to the new OA will hopefully be released next month. Going forward, MAHB hopes Malaysia pax traffic will return to FY19A levels or exceed it. We maintain our earnings estimates and DCF-TP which are premised on Malaysia domestic/international pax traffic hitting 100%/85% of FY19A levels. We continue to like MAHB as a ‘slow and steady’ post-COVID recovery play. 



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Keppel Corp ($6.43, up 9 cents) announced that it has entered into an agreement with Aermont Capital Group SCSp to acquire an initial 50% stake in leading European real estate manager, Aermont Capital (Aermont). This marks a pivotal step in Keppel’s transformation to be a global asset manager and operator, giving the Company a strong foothold in Europe and significantly expanding its presence beyond Asia Pacific.


For illustrative purposes only, based on the Group’s audited results for the full year ended 31 December 2022 (FY 2022):

• had the acquisition been effective on 1 January 2022, the earnings per share for FY 2022 would have increased from 52.1 cents to 52.4 cents;

• had the acquisition been effective on 1 January 2022, the Group’s recurring income6 for FY 2022 would have increased from S$503 million to S$512 million; and

• had the acquisition been effective on 31 December 2022, the net tangible assets per share as at 31 December 2022 would have increased from S$5.49 to S$5.50.


Keppel Corp’s market cap stands at S$11.3bln and currently trades at 7.5x forward PE and 1.05x PB, with a dividend yield of 5.1%. Consensus target price stands at S$7.52, representing 17.62% upside from current share price. We continue to like Keppel’s move towards being a global organization, which would help to minimize country/region risk going forward. We continue to maintain an “Accumulate” rating on Keppel given it’s 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)



Sasseur REIT

Riding on growth tailwinds


■ The outlet mall industry continue to show the strongest yoy growth within China’s retail value chain

■ SASSR’s portfolio has benefited from consumer spending tailwinds and AEIs

■ Reiterate Add, with an unchanged TP of S$0.95


Robust outlet malls industry sales growth in 1H23

The outlet mall segment continues to demonstrate resilience, posting the highest yoy sales growth within China’s retail value chain. According to the 2022-2023 China Outlet Industry White Paper released by the China Department Store Business Association, outlet mall sales in China exceeded Rmb130bn in 1H23, equivalent to 62% of 2022’s sales value, as buyers continue to look for quality with value. This translates to 11% yoy growth in sales, outpacing the overall retail sector recovery of 8.1% over the same period. Within SASSR’s sponsor Sasseur Group’s portfolio of 17 outlets, tenants sales improved 33.5% in 9M23, aided by organic sales growth and new outlet openings. 



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