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CGS CIMB |
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Nanofilm Technologies Int'l Ltd Foray into Europe
■ On 21 Dec 2023, Nanofilm announced the acquisition of Germanincorporated AxynTec for c.S$9.9m. ■ Nanofilm aims to build a bigger presence in Europe via this acquisition. ■ We reiterate our Reduce call on Nanofilm as re-rating catalysts have yet to emerge.
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Thai Beverage Thai government to cut alcohol excise tax
■ The Thai government has announced a reduction in domestic alcohol tax for a year, as part of a wider strategy to boost tourism and the economy. ■ We think the lowered excise taxes can potentially boost THBEV’s spirits segment volume and margins, based on our sensitivity analysis (Fig 1). ■ Reiterate Add. This is a positive surprise; we had previously anticipated an excise tax hike in CY24F to fund the government’s stimulus measures.
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UOB KAYHIAN |
MAYBANK KIM ENG |
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Sembcorp Industries (SCI SP) Setting A Solid Foundation For Growth From Now Till 2028
SCI had a busy two months following its Investor Day on 6 Nov 23, announcing over 1GW in renewables deals. These were well spread out across Singapore, China, India and Vietnam with most of the new projects focused on wind. As at end-23, the company had 13GW of gross installed and under-development capacity, which places SCI in a good position to attain its target of 25GW by 2028. Maintain BUY. Target price: S$7.20.
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Tenaga Nasional (TNB MK) Refining targeted subsidies
Routine pass-through The government again upheld Tenaga’s ICPT mechanism for 1H24. Tariffs are mostly maintained, with the only change being the removal of the 2.0sen/kWh rebate for household users consuming 600-1,500kWh/month. This signals further progress on targeted subsidies, and alleviation of already dissipating ICPT concerns, in our view. Maintain HOLD with an unchanged MYR10.00 TP. We prefer Mega First (MFCB MK, BUY, CP: MYR3.73, TP: MYR4.30) in the utilities space.
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| LIM & TAN | LIM & TAN |
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Seatrium ($0.12, down 0.5 cent) refers to the announcement made on 5 May 2023 in relation to two Offshore Substation Platforms for both the Empire Wind 1 and 2 Offshore Wind Farms for Empire Offshore Wind LLC, a joint venture between Equinor and bp Seatrium’s market cap stands at S$7.9 bln and currently trades at 0.9x PB. It is currently loss making and does not pay dividends. Consensus target price stands at S$0.17, representing 41.7% upside from current share price. Despite this cancellation, we continue to like Seatrium’s continued winning streak of contract wins and delivering/executing them successfully. However, we also highlight that majority of the contributions from the completions are expected to be much later, implying investors need to take a longer time horizon to see the results any new contract wins and deliveries. Unless there are more cancellations or macro economic conditions worsen for the O&G sector, we think the trajectory remains in a positive/upward bias and as such, we continue to maintain an “Accumulate” rating on Seatrium.
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Dyna-Mac Holdings Ltd / Dyna-Mac ($0.325, down 0.02) is pleased to announce that it has signed a Share Purchase Agreement (SPA) to acquire 100% of the total issued and paid up share capital of Exterran Offshore Pte. Ltd. (“Acquired Entity”). While the acquisition price to book value of 2.26x seems high, the latest independent valuation done in Aug’23 by OrangeTee of S$17mln, implies that the acquisition price of US$8.25mln was done at a market discounted price. More importantly, the acquisition makes strategic sense given that it would allow Dyna-Mac to reduce outsourcing their jobs and the new facility is located next to their existing production facility allowing them ease in transferring jobs and work-loads to the new facility, reducing execution risks and transportation costs. At 32.5 cents, Dyna-Mac is capitalized at $337mln and trades at 16x consensus FY23 PE, 6.6x price to book and 1% dividend yield. Based on Bloomberg consensus target price of 51 cents, 1 year upside potential is 55%. |
