buysellhold july.23



DBS Group

Regional financial conference takeaways


■ DBS reiterated its expectations of NII staying stable yoy in FY24F, predicated on loan growth offsetting softer NIMs in the event of potential Fed rate cuts.

■ The integration of Citi Taiwan is progressing well – DBS is on track towards its c.S$200m-250m target in incremental bottomline in FY24F.

■ Reiterate Hold with unchanged GGM-based TP of S$35.30. Its c.8% FY24F dividend yield is attractive but asset quality deterioration is a downside risk.



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Prudential PLC

Key regional financial conference takeaways


■ While 9M23 MCV insurance growth was extremely strong, higher base effects make yoy growth more difficult from 4Q23F onwards, in our view.

■ We still see the bancassurance channel in mainland China continuing to drag on its overall new business profit (NBP) growth until 2Q24F.

■ Singapore’s NBP improved in 3Q23 yoy after a difficult 1H23, and we think this growth momentum can continue in 4Q23F.

■ Reiterate Add rating, but cut TP to HK$114, with lower FY23F-25F EPS of 25.6-48.8%, primarily on weaker investment income assumptions. 



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ST Engineering (S$3.78, up 3 cents) announced that its Cyber business, ST Engineering Info-Security Pte. Ltd., has entered into an agreement to acquire 100% of the issued shares of D’Crypt Pte. Ltd. (D’Crypt) from Keele Investments Pte. Ltd., an indirect subsidiary of Starhub Ltd, for a cashfree and debtfree purchase consideration of $67.5m, subject to certain conditions precedent and customary post-completion adjustments. 

At $3.78, market cap of ST Engineering is S$11,774mln, FY23F P/E is 20.3x, current P/B is 4.8x, FY23F dividend yield is 4.5% and its net debt position of S$5.78bln (as of end-1H23) equates to net gearing of 236%. Nevertheless, we believe that its gearing position should be lowered by 4Q23 given that its net debt has been on a decreasing trend since 4Q22.

Overall, we continue to like ST Engineering due to its:- (i) expected earnings growth forecasted for FY23 and FY24 where contributions from Transcore would start becoming more significant; (ii) attractive and sustainable dividends; and (iii) robust order book. For FY23F and FY24F, we are anticipating its net profit to come in at S$579.5mln (+8.3% yoy) and S$677.6mln (+16.9% yoy) respectively. Recommend ACCUMULATE.


Sembcorp Industries ($5.07, up 16 cents) has announced that its wholly-owned subsidiary Sembcorp Solar Singapore has been awarded a solar deployment tender on Jurong Island by JTC with a contracted capacity of 117 megawatt peak (MWp).

Equivalent to some 80MW, the tender is the largest project by capacity awarded by a public sector agency in Singapore to date. The solar deployment on Jurong Island will cover 60 ha of interim vacant land and the rooftops of five JTC buildings, including the Jurong Rock Caverns above-ground facilities and Jurong Island Checkpoint

The award of the JTC tender is not expected to have a material impact on the earnings per share (EPS) and net tangible assets (NTA) per share of Sembcorp for the FY2023 ending Dec 31.

Sembcorp Industries’s market cap stands at S$8.8bln and trades at trailing 12-mth PE of 9.9x and current PB of 2.0x. Consensus target price stands at S$6.64, representing 30.9% upside from current share price.



Streamlining its cybersecurity business

■ StarHub is divesting D’Crypt to STE for c.S$87m, streamlining its cybersecurity business to focus more on platform-based software solutions.

■ Core earnings impact is likely minimal at 1-2% of FY24-25F EPS, but the group will book a c.S$10m loss on disposal upon conclusion of the deal.

■ We see longer-term benefits from increased focus on Ensign’s growth, but this should take time to translate into meaningful earnings growth. 

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