buysellhold july.23

MAYBANK KIM ENG

LIM & TAN

PTT Global Chemical (PTTGC TB)

Limited earnings improvement despite positive sentiment

 

Maintain SELL, raising TP to THB33

We maintain SELL on PTTGC but raise our TP to THB33 on higher aromatic spreads. Despite revising up our earnings, our forecasts remain 23-48% below Bloomberg consensus for FY24-26E as we believe recoveries in petrochemical spreads will take much longer than what the Street is expecting. Moreover, at 30/21x FY24/25E P/E, we think such recovery is already priced into the stock. Recent share price increase has likely been driven by positive sentiment about China’s economic data, but unless spreads continue to improve, we see potential for correction. We prefer PTT and BCP in the energy space.

 

 

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We highlight the key points from Pan United Corp’s ($0.445, down 1/2ct) FY23 annual report:

The global economy continues to improve, but recovery remains slow and uneven. The current landscape is fraught with uncertainties brought about by ongoing geopolitical tensions, high inflation, higher interest rates and strain on supply chains. These factors add complexity to operations, increasing business and operational risks. Like many businesses, PanUnited is not immune to the adverse impacts of these macroeconomic challenges. However, we believe that we are well-positioned to address stakeholder needs and capitalise on growth opportunities arising within our key markets, namely Singapore, Malaysia and Vietnam.

We continue to maintain an “Accumulate” rating on Pan United Corp as we believe that it will continue to benefit from the construction upturn in SE Asia and valuations continue to remain cheap at 7x PE, 5-6% yield and Bloomberg consensus 1 year target price of 60 cents implies a potential upside of 34%.

LIM & TAN

 

We highlight the following key points from Delfi’s (S$0.92, down 1 cent) FY23 annual report:

Letter from Delfi’s Chairman: Despite the challenges that 2023 presented, we achieved total revenue for the year of US$538.2 million, an increase of 12.7% over 2022. This marks a record level in our history for our branded consumer business. We also achieved PATMI of US$46.3 million for the year, which is the highest level achieved since 2015.

At S$0.92, Delfi is capitalized at S$562.3mln and trades at 1.6x P/B and P/E of 9.0x. Full-year dividends have remained stable at 5.75 S cts, representing a dividend yield of 6.3%.

Going forward, cocoa prices have tripled from a year ago and could further affect Delfi’s margins in FY24, although we note Delfi has significantly hedged raw material prices for 2024. Chocolate consumption remains healthy with strong economic growth across Indonesia and Philippines, Delfi’s two core markets.

Together with its attractive valuations of 9.0x P/E vs historical average and peers average P/E of >15x, we maintain Accumulate on Delfi.

 

 
   

 

 

 

 

 

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