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UOB KAYHIAN |
UOB KAYHIAN |
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Offshore Marine – Singapore Bullish View Remains
Despite Recent Volatility In The Middle East Termination of jack-up contracts in the Middle East has injected some uncertainty into the market, however dayrates and utilisation rates appear to be holding up well. Despite geopolitical tensions in that region, oil prices have not spiked to elevated levels while global oil demand has been robust. Recent US oil services companies’ 1Q24 results have been bullish, reinforcing our confidence in the sector. Sector rating: OVERWEIGHT.
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StarHub (STH SP) Favourable Tailwinds As DARE+ Initiatives Near The End
Starhub is set to reach an inflection point in 2H24 as the group reaches the tail end of its DARE+ investment programme. We expect to see expanding margins along with earnings growth from the ongoing realisation of DARE+ benefits, which are likely to lead to higher dividends in our view. Data roaming recovery remains on track while the group reiterated its commitment to its share buyback programme. In view of the lush 2024 dividend yield of 6.7%, we maintain BUY with the same target price of S$1.41.
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UOB KAYHIAN |
MAYBANK KIM ENG |
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Wilmar International (WIL SP) Recovery In China; Accumulate On Weakness
We expect 2Q24 earnings to be higher qoq and yoy, which is different from previous years when 2Q is usually lower qoq. This is mainly attributed to enhanced operating margin and good sales volume across all segments. We believe YKA’s performance would continue to improve with stronger consumer sentiment, margin improvement and higher utilisation rate for soybean crushing. Maintain HOLD. Target price: S$3.35. Buy on weakness.
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Wilmar International (WIL SP) Wait for better days
Some improvements, but headwinds remain Wilmar’s recent 1Q24 shows bright spots in consumer and wholesale recovery, especially in China. However, its industrial segments remain under pressure from tightening margins amidst falling commodity prices and weak demand. Until there is better clarity on China’s growth trajectory, we think the prospects of turnaround could see headwinds. New businesses such as central kitchens show promise, but material earnings contribution is some way off. We lower TP to SGD3.44 from SGD3.99 amidst weaker growth. Maintain HOLD.
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| LIM & TAN | LIM & TAN |
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Frasers Logistics & Commercial Trust / FLCT ($1.01, up 1 cent) reported that revenue of S$216.0 million and Adjusted Net Property Income of S$158.7 million for 1HFY24, representing increases of 3.9% and 1.8% respectively, from S$208.0 million and S$155.9 million in the first half of FY2023 (“1HFY23”). The year-on-year increases were mainly due to positive rent reversions and rental escalations, and contributions from Ellesmere Port, Connexion II and Worcester FLCT’s market cap stands at S$3.8bln and currently trade at 20x forward PE and 0.9x PB, with a dividend yield of 7%. Consensus target price stands at S$1.25, representing 24% upside from current share price. We have an Accumulate rating on FLCT given its attractive and stable dividend yields coupled with healthy gearing and decent upside of 24% to Bloomberg’s consensus 1 year target price.
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AIMS APAC REIT / AAREIT ($1.27, up 0.02) reported a 3.8% year-on-year (“YoY”) rise in distributions to Unitholders to S$74.3 million for the full year ended 31 March 2024 (“FY2024”). Gross revenue rose by 5.9% YoY to S$177.3 million for FY2024 supported by higher portfolio occupancy and strong positive rental reversions, alongside high tenant retention rates. The Manager remains confident in AA REIT’s portfolio of high-quality and well-located assets, supported by its ongoing execution of its four strategic pillars. Supply continues to be constrained in Singapore and AA REIT stands well-placed to benefit from a ‘flight to quality’ as it continues with its portfolio revitalization strategy. At 7.4% div yield, 0.9x price to book, 12x PE and 20% upside to consensus TP, we maintain Accumulate. |
