| PHILLIP SECURITIES |
CGS CIMB |
ETF Monthly: Dec 23 – Divergence and slow start expected in the new year
Summary of Asset Classes Performance in December & Outlook: As we head into January, some price consolidation is likely for most assets namely US Treasury Bonds, Bitcoin, Singapore Equities and Hang Seng Index. For S&P 500 and Gold, we are likely to see their respective bullish trends continue to create new highs. Meanwhile, the current bearish trend for Oil is likely to continue in the new year.
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Singapore Strategy Dec 23 wrap-up: Singapore in 5
■ The FSSTI closed Dec 23 at 3,240.27pts, up 167.2pts (+5.44%) mom on prospects of US rate cuts. ■ Following the release of our CY24 outlook report, our end-FY24F FSSTI target is now 3,392pts, pegged at 11x FY24F P/E.
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UOB KAYHIAN |
UOB KAYHIAN |
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Banking – Singapore The Interest Rate Cycle Has Reversed Course
Based on the dot plot, the Fed Funds Rate is expected to ease 75bp in 2024 and 100bp in 2025. The interest rate downcycle is facilitated by a decline in inflation as supply-side distortions are normalised. The interest rate downcycle has negative impact on Singapore banks’ NIM and net interest income. Downgrade to MARKET WEIGHT. Our top BUY is OCBC (Target: S$16.85) for its new dividend policy with payout ratio at 50%, focus on ASEAN and defensively low P/B of 1.06x.
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REITs – Singapore S-REITs Monthly Update (Dec 23)
There are healthy signs that inflationary pressure has abated. Maintain OVERWEIGHT. BUY CDREIT (Target: S$1.41), FCT (Target: S$2.42), FEHT (Target: S$0.76), KREIT (Target: S$1.06), LREIT (Target: S$0.80) and MINT (Target: S$2.69).
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| LIM & TAN | MAYBANK KIM ENG |
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Seatrium Limited (Seatrium, or the Group), has been awarded a contract by Shell Offshore Inc. (Shell) to construct and integrate the hull, topsides and living quarters of the Sparta semi-submersible Floating Production Unit (FPU). Seatrium’s market cap stands at S$8.0bln and currently trades at 1.0x PB. It is currently loss making and does not pay dividends. The consensus target price stands at S$0.17, representing 42% upside from the current share price. Despite being loss making, we like that Seatrium has continued on its winning streak of winning contracts and delivering them successfully. However, we highlight that the majority of the contributions are only expected to be much later, implying investors need to take a longer time horizon to see the result from all the new contract wins and deliveries. Nonetheless, the trajectory remains in a positive manner and as such, we maintain an “Accumulate” rating on Seatrium.
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Malaysia Banking A surprise pick-up in loans growth
Narrowing the gap to our 2023 forecast of 4.6% That industry loans growth improved to 4.9% YoY in Nov 2023 from 4.0% YoY in Oct 2023, is a positive, bringing industry loan growth more in line with our forecast of 4.6% for 2023. We have since introduced our 2024 loans growth forecast of 4.6% as well. We maintain a POSITIVE on the sector, with BUYs on CIMB, PBK, AMMB, HLBK, HLFG and ABMB.
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