buysellhold july.23



Airport Services

Every cloud has a silver lining


■ We see a healthy outlook for MRO providers in 2024F as issues faced by newer generation aircraft/engines could drive heavier work content, we think.

■ SIE should benefit most in 2024F given ESA’s GTF expertise. Steady margin expansion over the coming quarters should re-rate the stock, in our view.

■ STE is the longer-term play as strong US/China footprint and capacity additions should expand its global MRO market share.

■ Key sector risks: labour shortages, supply chain issues. Upgrade SIE to Add with higher TP of S$2.70. Reiterate Add on STE with higher TP of S$4.36.



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BRC Asia

Margins gained from higher volume


 1Q24 net profit came in at 20% of our FY24e estimates. This is typically the lull quarter for construction output. Revenue jumped 17% YoY due to low volume in the year earlier, as the labor crunch affected activities and order deliveries. We estimate higher volume was partly offset by a 17% lower ASP for steel rebars. Net profit gained from the absence of associate losses, and lower interest expense as net gearing improved to 0.46x (Dec 22: 0.65x). 



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Pan-United Corporation Ltd

Tailwinds from construction demand, low-carbon solutions


 FY23 net profit was 6% higher than our expectations. Net profit rose 56.2% YoY, lifted by higher ASP (we estimate +5%) and volume gain (+5%). Growth accelerated in 2H. 2H23 revenue gained 15% HoH, and net profit was +30%.



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CapitaLand Ascott Trust

Further upside from occupancy growth


 FY23 DPU of 6.57 cents (+16% YoY) exceeded our expectations by 11.7% due to a oneoff realised exchange gain. Excluding one-off items, adjusted DPU increased 14% YoY to 5.44 cents, which was 93% of our forecast.



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Manulife US REIT (MUST SP)

2H23: Pulling Multiple Levers To Deleverage


There is a pick-up in leasing activities with MUST securing two new tenants in 4Q23: an insurance firm at Capitol and a public administration agency at Figueroa. In 1Q24, existing tenant Hyundai Capital expanded at Michelson, while The Children’s Place has returned to Plaza. MUST will focus on asset dispositions and a series of bite-size EFRs to lower aggregate leverage below the target of 45%. We estimate 2026 distribution yield at 47.3% and P/NAV at 0.18x. Maintain BUY. Target price: US$0.155. 



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We highlight the key points in The Straits Times’ article on Tiong Woon Corporation (S$0.48, unchanged).

The company is one of the region’s largest crane operators, with lifting capacity which can match well-known global leaders in the business like Mammoet and Sarens. It even partially took over Mammoet’s heavy lift business in Thailand via a strategic alliance with the multinational giant.

Tiong Woon’s market cap stands at S$111.2mln, and currently trades at 6.2x PE, 5.9x forward PE and 0.4x PB, with a forward dividend yield of 2.5%. We currently have a BUY call on TWC with a target price of S$0.88, representing 83.3% upside from current share price.

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