buysellhold july.23




4Q23F: Expect some seasonal softness


■ Updated management guidance on FY24F NIM trajectory, portfolio credit quality, wealth fees and dividends to steer the sector’s re-rating/de-rating.

■ Reiterate sector Neutral. Drastic Fed fund rate cuts affecting NIMs are a downside risk but c.7% div. yields should retain investors’ interest in banks.

■ UOB is our sector top pick for better sequential performance. We think NIMs could be relatively more defensive vs. peers given its funding profile.

■ We expect DBS to declare final DPS of S$1.04, OCBC to declare S$0.43 DPS, and UOB to declare S$0.95 final DPS in 4Q23F.



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Riverstone Holdings (RSTON SP)

Semiconductor Industry Recovery Will Benefit Cleanroom Glove Segment


Riverstone’s cleanroom gloves, which contribute about 80% of earnings, are expected to see a recovery in demand, driven by new clients onboarded in the preceding year and improvement in the semiconductor industry in 2024. On the healthcare gloves front, sustained product customisation efforts with new production lines are yielding results, as seen from increased demand for higher-margin customised healthcare gloves. We upgrade Riverstone to BUY with a 22% higher target price of S$0.82.



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Mapletree Logistics Trust (MLT SP)

Taking a breather, downgrade to HOLD


China headwinds, easing occupancy MLT reported 3QFY24 DPU of 2.253 cents, -0.7% QoQ and +1.2% YoY. 9M DPU of 6.792 cents +0.7% YoY, is at 78% of our full-year forecast. Organic growth and contributions from newly acquired assets were offset by higher borrowing cost, weaker FX and lower income from its China portfolio. Reversions stayed positive despite broad-based occupancy slippage. Debt metrics were relatively unchanged. While logistics is a good theme, sluggish recovery in China and competition from new supply make us downgrade MLT to HOLD. We lower estimates but raise TP to SGD1.7, factoring in a lower discount rate. 



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Keppel DC REIT ($1.8, down 5 cents) announced $76.4 million in distributable income (DI) for 2H 2023, bringing DI for FY 2023 to $167.7 million, 18.5% and 9.3% lower than 2H 2022 and FY 2022 respectively. The year-on-year decreases were mainly due to higher finance costs and loss allowances for the uncollected rental income from the Guangdong Data Centres. There were also net lower contributions from some of the Singapore colocation assets arising from the higher facilities expenses, and less favourable forex hedges. This was partially offset by positive reversions and escalations, contributions from acquisitions made in FY 2022, higher finance income and tax savings. Performance came inline with expectations.

KDC REIT’s market cap stands at S$3.1bln and currently trades at 18x forward PE and 1.3x PB, with a dividend yield of 5.2%. The consensus target price stands at S$2.11, representing 17% upside from the current share price. With decent upside and yield coupled with potentially lower rates, “Accumulate”.


Genting Singapore

A positive surprise could be on the table


■ MBS’s hold-adjusted EBITDA (adjusted for win-rate) grew 22.5% yoy and 3.5% qoq to a record-high of US$473.0m in 4Q23.

■ Rolling chip (i.e. VIP) volume grew 2.1% yoy compared to non-rolling chip and slot (i.e. mass) volume growth of 30.0% yoy and 43.9% yoy, respectively.

■ A comparable set of financials from GENS should see qoq growth instead of our expected qoq decline in hold-adjusted EBITDA. Reiterate Add



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Mapletree Logistics Trust

Stable performance qoq


■ 3QFY24 DPU of 2.253 Scts is broadly in line at 26.2% of our FY24F forecast.

■ MLT expects China rent reversions to remain negative; meanwhile, it continues to execute on its asset recycling strategy to rejuvenate its portfolio.

■ Reiterate Add rating with an unchanged TP of S$1.88. 



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