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CGS CIMB |
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ComfortDelGro UK tailwinds fuel earnings growth in FY24F
■ We forecast CD to record PATMI of S$53m in 4Q23F (+6% qoq, +108% yoy), with UK margin expansion offsetting Singapore’s seasonally weaker results. ■ FY24F PATMI could expand by another 15% yoy, riding on favourable industry dynamics in the UK and further growth of taxi segment, in our view. ■ Reiterate Add with a higher TP of S$1.60 as we roll over valuation base year.
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Property - Overall Direct beneficiary of US rate cuts ahead
■ We expect HK property share prices to rebound in 2024F as US cuts the Fed Funds Rate over the next three years. ■ We are not as bearish as our analyst peers on HK home prices. We project a 3% decline in prices in 2024F, vs. double-digit decline forecasts by our peers. ■ Lower interest rates, narrowing negative carry and demand from mainland Chinese buyers support our constructive view on the HK residential market. ■ Reiterate sector Neutral on HK Property; positive on residential segment and negative on office segment. Top picks: SHKP, CK Asset and Link REIT.
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MAYBANK KIM ENG |
UOB KAYHIAN |
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Malaysia Property MOU signed on Johor-S’pore Special Economic Zone
A positive move to lift the future of Johor While no further details are revealed on the Johor-Singapore Special Economic Zone (JSSEZ), the MOU signed yesterday reaffirms the joint commitment between Malaysia and Singapore to strengthen economic cooperation. We remain positive on the JSSEZ, which will create more job opportunities and commercial activities in the Iskandar M’sia region and eventually, drive demand for properties. That said, the positives have been priced in and we advocate investors to consider Penang, for an exposure in the upcoming Bayan Lepas LRT. Our BUYs are SPSB, TILB.
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Keppel DC REIT (KDCREIT SP) Latent Potential Unleashed As AI Gradually Permeates Our Daily Lives
KDCREIT is a pure play on data centres in Asia Pacific and Europe. It is differentiated by its focus on colocation data centres, which account for about 65% of rental income. KDCREIT’s colocation data centres have generated stronger positive rental reversion at mid-to-high single digits in 3Q23. It has a pipeline of data centres under development and managed by Keppel Group’s private data centre funds and Keppel T&T worth more than S$2b. Initiate coverage with BUY and target price of S$2.10.
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| LIM & TAN | LIM & TAN |
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Pan United ($0.385, up 0.5 cent) announced that it has signed a Memorandum of Understanding (MOU) with Chevron, Keppel, Surbana Jurong, Air Liquide Singapore, Osaka Gas Singapore, and Pavilion Energy to collaborate on lower carbon opportunities to support Singapore’s aspiration of achieving net-zero emissions by 2050. Collectively known as the Low Carbon Technology Industry Consortium (LCT-IC), the Parties will explore through the advancement of technology, to accelerate the development of cost-effective Carbon Capture, Utilisation and Sequestration (CCUS) as well as the production, transportation, distribution and utilisation of lower carbon hydrogen and its derivatives at scale. This is with the aim of commercialising new lower carbon technology pathways in Singapore. Pan United’s market cap stands at S$268mln and currently trades at 8x forward PE and 1x PB, with a dividend yield of 5%. The consensus target price stands at S$0.55, representing 40+% upside from the current share price. We continue to like Pan United’s direction in going green as it is likely to benefit as the market leader from the government’s shift towards a greener Singapore. With consistent share buybacks, cheap valuations, and Singapore’s construction industry still doing well (as evidenced by other construction companies in Singapore), we continue to maintain an “Accumulate” rating on Pan-United.
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We highlight key points from BRC Asia’s ($1.80, up 2 cents) just released annual report: In terms of financial performance, it was a tale of two halves. BRC started FY2023 on the back foot, with average offtake slowing substantially as work at construction sites across Singapore grappled with persistent and serious workplace safety concerns amid rising fatality rates. Demand started picking up after June 2023 with the ending of the six month Heightened Safety Period imposed by the Ministry of Manpower. With the recovery in construction activities, the Group was able to leverage on its strong order book to achieve an outstanding second-half performance, both on a sequential and on a year-on-year basis. Conclusion and Recommendation: At its last traded price of $1.80, BRC ASIA is capitalized at $494mln and trades at a forward and prospective PE ratio of 6.5x and 5.9x based on consensus earnings estimates of $76mln and $83mln. Even without considering any dividend increase, dividend yield on a trailing basis is already an attractive 8.88%. But we believe there is a good chance for dividends to increase going forward given the recent sale of their hospitality asset at an attractive profit which will also bring in solid cash flows. Also, we believe core business is expected to increase another 5-10% given the upswing in Singapore’s construction industry. We maintain an “Accumulate” rating on BRC ASIA and note that consensus target price of $2.09 implies a potential 1 year return of 17%. |
