buysellhold july.23



Singapore Air Transport – Mar24

Trickling into a seasonally lulled quarter


 Another weak month for the Singapore air transport sector, as the valuation disparity has drawn investors to HK/China-listed peers. China was the last country to lift border restrictions, and HK/Chinese carriers,such as Cathay Pacific, are catching up on volume and profitability (Figure 5).


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Data centre projects filling the MRT 3 void


■ Government rollout picking up; data centres in Johor can replace MRT 3.

■ Consensus FY24F/FY25F EPS raised by 44%/76%, leaving valuations relatively unchanged over a period of more than one year.

■ Gamuda, Suncon and Econpile are our top picks and have economic moat



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Agricultural Bank of China-A

Strongest net profit growth of big-four banks


■ ABC’s FY23 net profit growth of 4.7% was the strongest among China’s bigfour banks, despite its FY23 PPOP falling 1.9% yoy.

■ This was the eighth time in nine years ABC has delivered low/mid-single digit net profit growth and we expect this to continue over FY24F-26F.

■ FY23 dividend payout ratio was 31%. Its payout ratio has stayed within the 30-31% range since 2015, and we see this as sustainable over FY24F-26F.

■ Reiterate Reduce rating, with a higher TP of Rmb3.80. 


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We highlight the following key points from Haw Par Corp’s ($9.73, up 0.05) FY23 annual report:

2023 marked a year of recovery from the Covid-19 pandemic. With the improvement in our Healthcare and Leisure businesses and the increase in investment income from our strategic investments, the Group achieved record earnings of $216.6 million representing a 46% increase from 2022. Group revenue grew by 27% to $232.1 million as demand for Tiger Balm products in Asian markets rebounded due to improved consumer sentiment.

At $9.73, Haw Par is capitalized at $2.15 billion and trades at 10x PE, 4.1% yield and 0.6x book. Valuations are undemanding, especially comparing its current market cap of $2.15 billion to its holdings of UOB, UOL & other long-term investments of $2.7 billion + cash plus debt securities worth $760 million. Given Haw Par’s defensive valuations and decent dividend yield, we believe deep-value investors with a longer term view can look to “Accumulate” Haw Par for a cheap entry into its “Prized” “Tiger-Balm” brand. 


We highlight the key points from Capitaland Ascendas REIT’s / CLAR ($2.78, up 1 cent) FY23 annual report which was just released:

CLAR continued to record a healthy operational and financial performance in FY2023. This was attributed to our well-balanced portfolio comprising assets in the business space, life sciences, logistics, industrial and data centre sectors across Singapore, Australia, the US and the UK/Europe, as well as our prudent capital management approach which provided liquidity for CLAR to execute its acquisition plans.

CLAR’s market cap stands at S$12.2bln and currently trades at 19x forward PE and 1.2x PB, with a forward dividend yield of 5.8%. Consensus target price stands at S$3.13, representing 13% upside from current share price. We continue to like CLAR for its fundamentally strong and diversified portfolio that can benefit from it’s pivot towards data centres amidst a lower interest rate environment. With inflation peaking and downside risks for REITs minimised, we position CLAR as a liquid large-cap REIT that can benefit from the “soft landing” that the Fed envisions. As such, we maintain an ACCUMULATE rating on CLAR. CLAR anchors an investor’s portfolio while collecting a defensive and steady yield until valuations recover to a pre-COVID high of c.1.6x PB.



Seatrium Ltd

S$350m of repairs and upgrade contracts


■ STM announced today it has won S$350m of repairs & upgrade contracts, including for FSRU/FPSO conversions/upgrades.

■ These projects will commence from 2Q24F and complete by end-2025F and are not included in order backlog given the short execution period, said STM.

■ We estimate GM for repairs and conversion contracts to be c.20%, higher than EPCC contracts (mid-teens). Add call and TP unchanged at S$0.14.



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