| CGS CIMB |
CGS CIMB |
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Wilmar International Supported by sustainable yields
■ FY23 core net profit of US$1.28bn was in line, at 104.2% of our FY23 estimate, led by an improvement in margins in 2H23. ■ We expect tepid net profit growth for FY24F due to less scope for margin expansion following stable prices of key commodities like CPO and sugar. ■ Our TP drops to S$3.94, now based on 11x FY25F P/E (5-yr mean). Retain Add on sustainable yield of c.5% and volume-driven profit growth in FY24F
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SingTel Raising c.S$1bn from Bharti stake sale
■ Singtel announced the sale of a 0.8% stake in Bharti Airtel to GQG Partners. Singtel expects the sale to raise gross proceeds of c.S$950m. ■ We view the stake sale positively given Bharti’s elevated valuation multiple (34x FY25F P/E) and strong 1-year share price performance. ■ Proceeds could be used to drive down gearing and/or improve shareholder returns, in our view. Reiterate Add with an SOP-based TP of S$2.87.
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UOB KAYHIAN |
LIM & TAN |
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United Hampshire US REIT (UHU SP) Hallmark Of Defensive Strength
UHU is exceptionally defensive in many ways: a) its strip centres benefit from a demographic shift towards suburban locations, b) necessity spending accounted for a sizeable 62% of its base rental income, c) its strip centres have a long WALE of 7.1 years and lease expiries in 2024 accounted for only 2.2% of base rental income, and d) there is no refinancing requirement until Nov 26. Valuation is attractive with 2024 distribution yield at 9.7% and P/NAV at 0.64x. Maintain BUY. Target price: US$0.68.
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Singtel ($2.37, up 0.03) has unlocked another S$0.95 billion with the sale of a 0.8% direct stake in regional associate Airtel to US-based investment firm GQG Partners. The resultant gain from the sale is estimated to be S$0.7 billion. This transaction is the latest in the Singtel Group’s capital recycling efforts to unlock value from its assets, bringing the total capital recycled to S$8 billion since its strategic reset in 2021. This has allowed the Group to fund the growth of its data centre and IT services, as well as reduce net debt by S$3.2 billion as of end September 2023. The Group has also returned S$0.8 billion in special dividends to shareholders from capital recycling, contributing to cumulative dividends of S$5.2 billion paid out to shareholders since April 2022. We remain positive on SingTel. With its NAV per share presently at S$1.58 while SingTel currently trades at 1.5x P/B for FY24F, our target price for the stock is at S$2.84 based on 1.8x P/B which in turn represents a discount to its 10-year historical average P/B of 2.1x. Coupled with its attractive dividend yield of over 5%, we are thus retaining our ACCUMULATE recommendation on SingTel. |
| LIM & TAN | PHILLIP SECURITIES |
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Hongkong Land / HKL (US$3.15, up 6 cents) reported that Underlying profit attributable to shareholders fell by 5% to US$734 million. Performance during the year was impacted by lower profits from Development Properties, despite improved results from Investment Properties compared to 2022, as trading conditions in its key markets continue to be impacted by economic uncertainties and subdued capital market activity HKL’s market cap stands at US$6.95bln and currently trades at 8.8x forward PE and 0.2x PB, with a dividend yield of 7%. Consensus target price stands at US$3.76, representing 20% upside from current share price. While price and valuations have declined as a result of pressure faced from China’s property market, valuations are now at fire sale at 0.2x PB and believe that HKL’s strong cashflow will sustain the company until the broader economy recovers. As such, we recommend an Accumulate on HK
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LHN Limited Another growth driver emerges
In the 1Q24 update, no financials were provided, but LHN reiterated that the occupancy of their portfolio of assets (industrial, commercial, co-living) is over 90%. The two major projects, 55 Tuas South and GSM Building, are proceeding as scheduled.
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