buysellhold july.23



CIMB Group Holdings Bhd

Undervalued large-cap Malaysian bank


■ We initiative coverage on CIMB Group Holdings with an Add call and TP of RM8.60, as we deem the bank undervalued at a CY25F P/E of 8.4x.

■ Potential re-rating catalysts include (1) increase in dividend payout ratio, (2) ROE expansion, and (3) above-sector loan growth.

■ We are positive on CIMB’s high exposure to the fast-growing Indonesian banking industry (we see 11-12% loan growth for Indonesia banks in 2024F).



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Hana Microelectronics

Stands to benefit from govt’s semi push


■ We believe Hana will benefit from the government’s plan to establish a local semiconductor manufacturing supply chain to support the local EV industry.

■ In Feb 2024, Hana established a 49:51 joint venture (JV) with PTT for possible investments in the smart electronics industry.

■ We think Hana can assist the government on IC design and R&D for power electronics by leveraging its front-end experience with Powermaster.



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Frasers Logistics & Commercial Trust (FLT SP)

Continued Growth From Australia And Germany


FLT opportunistically deleveraged by divesting Cross Street Exchange for S$811m in Mar 22. Cap rates have reversed to expansion of 110bp yoy in Australia and 75bp yoy in Germany. FLT has announced a small acquisition of four logistics properties in Germany for S$189m. More acquisitions are forthcoming, supported by a sizeable sponsor pipeline and its low aggregate leverage of 30.7%. FLT provides an attractive distribution yield of 6.3% for FY24 (MLT: 5.7%). Maintain BUY. Target: S$1.52. 



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Scientex (SCI MK)

2QFY24: Precise Executions Sustaining Above-Pandemic Earnings Delivery


Scientex recorded its highest half-yearly earnings in 1HFY24, well above the prepandemic level. This mainly reflects margin expansion for its manufacturing segment on better cost efficiency and product mix, besides robust projects growth in the property segment. The group’s unique dual-segment business model has been proven to be effective and continues to entrench substantial earnings growth amid global economy volatility. Maintain BUY with a higher target price of RM4.58.



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We highlight the following from CDL Hospitaliy Trust’s ($1.00, up 1 cent) annual report

CDLHT’s portfolio showcased a strong operating performance in FY 2023, buoyed by the gradual recovery of international tourism. While outbound travel from China has yet to fully rebound, international tourism witnessed significant improvement during the year, reaching 88% of pre-pandemic levels. Reflecting this positive trajectory, most of our portfolio markets experienced growth, with nearly all portfolio hotels reporting a yoy increase in Revenue Per Available Room (“RevPAR”). As a result, we recorded a noteworthy 11.8% yoy increase in net property income (“NPI”) to S$138.3 million for the year, from S$123.7 million for FY 2022.

CDL HT’s market cap is S$1.2bln, and it currently trades at 21x forward PE and 0.67x PB, with a dividend yield of 6.4%. The consensus target price is S$1.12, representing 12% upside to the current share price. We believe CDL HT will continue to benefit from the re-opening of global economies post-Covid-19 lockdowns, notwithstanding some sort of normalization process and the expected interest rate cuts in FY24. We maintain an “Accumulate” rating on CDL HT



We highlight the key points from the just released Suntec REIT’s ($1.08, down 0.01) FY23 annual report:

Suntec REIT’s strong fundamentals enabled the portfolio to deliver a steady performance despite strong headwinds. Gross revenue increased 8.3% to $462.7 million and net property income declined marginally by 0.8% to $313.2 million. Income contributions from joint ventures declined 20.9% to $94.0 million mainly due to lower contributions from MBFC Properties, as an existing shareholder loan was replaced with a bank loan, and properties incurred higher interest costs. Suntec REIT’s total distributable income for FY 2023 was $206.8 million, 19.1% lower year-on-year as a result of higher financing costs and the weaker Australian dollar. Distribution per unit (“DPU”) was 7.135 cents, 19.7% lower year-on-year. 


At $1.08, Suntec REIT is capitalized at $3.1 billion, Forward PE is 19.3x, dividend yield is 7.6%, price to book is 0.5x. Bloomberg consensus 1 year target price of $1.20 implies a potential upside of 11%. On the back of upcoming rate cuts and potential total return of 19%, we maintain “Accumulate” rating on Suntec REIT.

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