buysellhold july.23



Singapore Airlines (SIA SP)

Feb 24 Operation Data: Both Pax And Cargo Data Better Than Expected


SIA’s Feb 24 operation data beat our expectation, with pax load and cargo load exceeding our projections by 4.3% and 6.8% respectively. The strong pax load benefitted from the boost in Chinese visitor arrivals after Singapore’s implementation of the visa-free arrangement for Chinese visitors effective from 9 Feb 24. We raise our FY24 net profit forecast by 1.8% and estimate SIA’s 4QFY24 core net profit at S$553m. Maintain HOLD with a higher target price of S$6.31.



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Hong Leong Asia

Overlooked SG/MY building materials proxy


■ We believe HLA is an underappreciated proxy to the SG/MY construction industry upcycle – current share price implies 2.5x P/E for its BMU unit.

■ BMU segment’s PAT grew 167% yoy in 2H23 as its MY operations returned to profitability, while its SG operations also benefited from strong orderbook.

■ We forecast 15% PATMI growth in FY24F riding on strong growth momentum of its BMU business and diesel engine unit recovering from a low-base. 



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Gojek Tokopedia (GOTO IJ)

Kitchen Sink Of Rp76.6t In Goodwill Might Clear Future Negative Surprise


GOTO disclosed that there could be a goodwill impairment charge in 4Q23. We view that if the entire balance of Rp76.6t is charged off, it will clear the negative surprise in 2024. GOTO will record a positive adjusted EBITDA in 4Q23 with the on-demand service segment continuously being EBITDA positive. Future upside will come from selling financial service and providing loans to TikTok customers. With the large impairment surprise behind us, we upgrade GOTO to HOLD with a target price of Rp73. 



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Rating BUY (as at 18 March 2024)
Last Close SGD 2.48
Fair Value SGD 3.11


No impending sale of Optus
• Singtel denied reports on offloading Optus
• Singtel is committed to its Australian business for the long term
• We believe a potential partial stake sale of Optus is an option to create value unlocking and dividend upside

Investment thesis
Singtel is one of Asia's leading communications technology groups, providing a portfolio of services from next-generation communication, technology services to infotainment to both consumers and businesses. The group remains focused on reinvigorating the core business while capitalising on growth trends including growing their 5G market share, expanding the
footprint of its new digital businesses and scaling up NCS. We are constructive on NCS as an important growth driver, though upside to EBITDA margins might be challenging in the near term given the cost involved in recruiting suitable talents. Management targets low double-digit ROIC in the medium term as Singtel continues to drive cost efficiency, improve margins in the core business and scale growth engines such as NCS and the regional data centre business.


Singapore Post ($0.38, unchanged) today announced the completion of the strategic review of the group. The strategic review was initiated in May 2023 where Merrill Lynch (Singapore) Pte. Ltd. (“BofA Securities”) was appointed as the financial advisor with the aim of enhancing shareholder returns and ensuring the Group is appropriately valued.

SingPost’s market cap stands at S$855.0mln and trades at 22.4x forward PE and current 0.8x PB, with a present dividend yield of 1.5%. Consensus target price stands at S$0.56, representing 47% upside from current share price. Although valuations are fair, we think that this strategic review is much needed to help Singapore Post unlock value for shareholders as Singapore Post’s share price is at an all time low since it’s listing in 2003. Despite lowering their dividend policy from 60%-80% range to between 30%-50%, we believe that the extra cash will enable Singapore Post to have more firepower to transform into a much better company following its strategic review. As such, we recommend an “Accumulate” on Singapore Post.



Genting Malaysia (GENM MK)

Short term renovation pain for long term revenue gain


Maintain BUY call with a lower MYR3.16 DCF-TP (-3%) We visited RWG on 14 Mar 2024 to observe RWG operations. In our view, mass market GGR will take a backseat in FY24E after GENM temporarily shuttered the Circus Palace and Hollywood mass gaming floors for renovation but history tells us that it will come back stronger from FY25E onwards. We cut FY24E earnings by 15% but leave FY25E and FY26E earnings unchanged. We also trim our DCF-TP to MYR3.16 from MYR3.26. With >10% upside potential still, we maintain our BUY call on GENM. 



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