buysellhold july.23




Hopeful of improving profitability profile


■ We think that SATS should see qoq revenue growth of c.7% in 3QFY3/24F to c.S$1.37bn, driven by a recovery in cargo demand and higher IVAs.

■ As such, we expect SATS to report a c.S$28m in PATMI (+70% qoq) in 3QFY3/24F, with higher qoq revenue driving better operating leverage.

■ We reiterate our Add call and lift our DCF-based TP (WACC: 9.9%) to S$3.44 from S$3.00 after lowering our WACC due to lower risk-free rate assumption.



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Building Materials

Healthy industry fundamentals


■ The BCA expects both 2024F construction demand (+4% yoy from midpoint) and output (+2% yoy from midpoint) to reach the highest level since 2015.

■ We expect positive sector outlook for 2024F, on the back of elevated industry orderbooks, robust construction demand, improving site productivity.

■ Reiterate sector Overweight. BRC is our sector top pick given its strong 9% dividend yield.



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Velesto Energy Berhad (VEB MK)

4Q23 results preview: Best quarterly performance in years


Maintain BUY with a higher TP of MYR0.34 (Top Pick) We tweak our FY23-25E net profit forecasts by -5%/-10%/+6% based on the latest guidance provided by management with the group having 4 SPS (special periodical surveys) scheduled for FY24E. Our revised assumptions are: i) utilisation rates of 81%/82%/85%; and ii) blended DCRs of USD93k/ 112k/130k for FY23-25E respectively. We maintain a BUY on Velesto with a higher TP of MYR0.34 (+4sen) based on rolled-over 14x PER (unchanged) on mid-FY25E EPS (FY24E previously).


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Singapore Airlines ($6.53, up 1 cents) reported that its passenger traffic grew by 15.8% y-o-y for the month of December 2023 while passenger capacity expanded by 16.1% y-o-y. The group’s passenger load factor decreased by 0.3 percentage points (ppt) y-o-y to 89.4%. In December last year, SIA and Scoot posted monthly passenger load factors of 88.7% and 91.7%, respectively. The two airlines carried a combined total of 3.3 million passengers during the month, up 24.4% y-o-y.

SIA’s market cap stands at S$19.4bln and currently trades at 7.5x forward PE and 1.3x P/B, with a dividend yield of 5.8% (based on last year’s 38 cents div per share – Final 28 cents and Interim 10 cents). Given that share price has dropped c.20% from it’s 52-week high and that SIA has continually posted stellar operating results since the reopening of Singapore plus likely stronger than expected performance in the upcoming 3Q to Dec’23 result release and also still robust operating statistics and outlook going into the peak Chinese New Year travel season (Jan-March’24), we thus upgrade SIA from HOLD to BUY. (we are in the midst of preparing a special report to update SIA’s latest positive developments / upcoming results and also improving outlook)


SIIC ENVIRONMENT HOLDINGS LTD / SIIC (19.1 cents, up 0.2 cents) a water treatment and environmental protection company listed on the Main Board of the SGX-ST and the Main Board of the Hong Kong Stock Exchange wishes to update the shareholders of the Company and potential investors on its latest business developments.

The Group is pleased to announce that it has won the bid for the Jiguan Project with designed capacity of 50,000 tonnes per day in Heilongjiang, the People’s Republic of China (“PRC”). It has also signed a tariff increase agreement for its Qingpu Second WWTP Project in Shanghai. Secures a 50,000-tonne WWTP Project. The Company’s indirect 57.9687% owned subsidiary, Longjiang Environmental Protection Group Co., Ltd., has won the bid for Jixi City Jiguan District WWTP Project 3rd Phase (“Jiguan 3rd Project”) and signed an agreement with Jiguan Housing and Urban-Rural Development Bureau. Jiguan 3rd Project has a designed capacity of 50,000 tonnes per day and the discharge standard is Class I Standard A. The concession period shall last for 30 years.

We believe both SIIC and China Everbright water are benefitting from the China government’s re-focus on environmental protection, making it a top priority in the next 10 years. Consistent financial performance and also contract wins should support their share prices. Also both companies are not trading at expensive valuations, with SIIC and Everbright water trading at average PE ratio of 3x, price to book of 0.3x and dividend yields averaging between 8-9%. We believe investors should start to keep both companies on their radar for monitoring, especially if both companies continue to dish out such attractive dividends.



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