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CGS CIMB |
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Navigating Singapore
Green shoots in the economy are appearing even as earnings growth outlook slows. We project GDP growth of 2.8%, underpinned by an E&E upcycle, potential spillover from China’s economic recovery and sustained tourism sector performance. Headline inflation to moderate to 2.9% in 2024F. 2024 themes – semicon recovery and manufacturing diversion from China to Malaysia are potential tailwinds for the tech sector, REITs on rate pivot and high dividend yield plays. With the planned transition to 4G leadership to happen in 2024, amid policy stability, we also see opportunity to invest in growth stocks with sustainable earnings visibility. Our end-2024 FSSTI target is 3,392, pegged at 11x FY24F P/E. Our top conviction picks include CD, CLAR, CLAS, GENS, SATS, STM, UOB, VMS and YZJSGD. Within our small cap universe, we like CENT, CSE, FRKN, RSTON AND UMSH. Downside risks to our view include sticky inflation that would keep rates high for longer or a steeper-than-expected global macro slowdown that could adversely impact corporate earnings.
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Malaysia Strategy Multiple tailwinds support comeback in 2024
■ We see policy, currency, and domestic demand (aided by normalising tourism) as key catalysts for the equity market in 2024F. ■ At the risk of sounding like a broken record, we see earnings delivery improving next year. Recent trends in adjusted profits have been strong. ■ We are constructive on equities coming off a historically cheap currency and low valuations. Our end-2024F KLCI target is 1,755 pts. ■ Our top 5 liquid picks are Tenaga, Telekom, Gamuda, Sunway and Hong Leong Bank. ■ Exciting mid-caps are Muhibah, Dayang, Bermaz, Berjaya Food and Genetec
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MAYBANK KIM ENG |
LIM & TAN |
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Westports Holdings (WPRTS MK) Long awaited green light for expansion
Positive on latest development; maintain BUY We maintain our BUY rating for Westports, raising DCF-TP by 18% to MYR4.35. Our FY23E/24E earnings forecasts are largely unchanged, with a slight -2% adjustment to FY25E. Our higher DCF valuation is mainly due to the port’s extended concession period to 2082, now reflected in our projections, along with the Westports 2.0 (WP2) expansion. We reduced our WACC to 6.7% from 8.7%, aligning with updated debt-to-equity and adjusted beta. We view this development positively.
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CSE Global Limited / CSE Global ($0.41, down 0.005), a global systems integrator providing automation, communications and electrification solutions, today announced that it has secured two major contracts worth US$20.8 million (approximately S$27.7 million) in the United States of America (“USA”). With the additional contract wins, we believe that CSE Global will boost their order books to above the $900 million level and will provide the company with strong business visibility going into FY2024. CSE Global is riding on the positive mega trends of electrification as global governments across the globe look to reduce their reliance on “dirty” energy, while their automation business is benefitting from businesses looking to reduce their reliance on manual labor. Finally, the infrastructure sector that CSE Global operates in is expected to benefit from global government’s initiatives to pump prime their economies as the corporate sector demand slows on the back of uncertain demand conditions from the private sector. Trading at undemanding 10-11x PE, 6.7% div yield and 50% upside to consensus target price of 61 cents, we maintain an “Accumulate” rating on CSE Global. |
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