buysellhold july.23



Singapore Strategy

ESG Update


■ Our ESG portfolio has returned 9.6% since our last update in May 23, beating MSCI Singapore and Singapore iEdge ESG Leaders indices.

■ Of the 10 stocks in our ESG portfolio, the best performer since May 23 was YZJSGD (+40.3%), then SCI (+22.4%), BOCS (+18%) and PANU (+15.8%).

■ Underperformers were ST (-4.5%), CIT (-16.5%), and UOL (-19.6%).

■ We continue to favour stocks with fundamental drivers, followed by their ESG potential.

■ Top picks: CLI, KEP, SCI, ST, STE; high ESG potential picks: CD, PANU, STM, UOB, YZJSGD.


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REITs – Singapore

1Q24 Round-up: More Pluses Than Minuses


For the 21 S-REITs under our coverage, two were above expectations with three below expectations. The hospitality segment registered the strongest NPI growth averaging 9% yoy. We saw double-digit positive rental reversions for downtown malls, offices and logistics properties. Maintain OVERWEIGHT. BUY CDREIT (Target: S$1.48), FCT (Target: S$2.71), FEHT (Target: S$0.82), FLT (Target: S$1.55), KREIT (Target: S$1.20) and LREIT (Target: S$0.93). 



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Centurion Corp (CENT SP)

1Q24: Firing On All Cylinders


Starting off the year strongly, Centurion reported a 30% yoy increase in 1Q24 revenue with robust contributions from both the PBWA and PBSA segments. The results were better than expected with 1Q24 revenue making up 30% of our full-year forecasts. With greater confidence in its near- to medium-term outlook, backed by continued high levels of construction spending in Singapore, we have raised 2024-26 earnings by 9- 12%. Maintain BUY with a higher target price of S$0.77.



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Public Bank Bhd

Net interest margin bouncing back


■ PBB’s 1Q24 net profit was below our expectation (22% of our full-year forecast) due to lower-than-expected non-interest income.

■ We expect PBB’s net profit to increase c.5% yoy and 2-3% qoq in 2Q24F, underpinned by continuous expansion in net interest income.

■ Reiterate Add on PBB. Potential re-rating catalysts: write-back in management overlay and increase in dividend payout ratio. 



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LHN Limited (S$0.335, unchanged) reported robust results for 1HFY24, backed by an increase in co-living keys and resilient occupancy rates across all segments. Revenue from continuing operations increased by 27.2% yoy to S$54.5mln, driven by higher Coliwoo revenue (+91.1% yoy) and contributions from the Facilities Management Business (+13.6% yoy).

Despite higher interest expenses (+31.7% yoy), LHN reported a 13.7% increase in 1HFY24 core pre-tax profits to S$17.7mln. The Group maintained its interim dividend of 1.0 S ct, and we believe strong operating cashflows can allow them to maintain full year dividends of 3.0 S cts, an 9.0% dividend yield.

LHN’s market cap stands at S$137.0mln and trades at 0.60x P/B with a forward dividend yield of 9.0% based on 3.0 S cts/share. Forward P/E of 5.4x is attractive and is 0.5SD below its mean P/E of 10.0x since IPO. We continue to like LHN’s 1) Coliwoo brand name in a resilient co-living market, 2) strong pipeline of projects across all segments, and 3) cheap valuations backed by attractive yields. Maintain Accumulate with an unchanged target price of S$0.47, pegged to 7.5x core FY24F P/E.




SGX Mainboard-listed OUE Limited ($1.05, down 0.01) today announced its proposed undertaking of an off-market purchase of ordinary shares of OUE in accordance with an equal access scheme pursuant to the share purchase mandate (“Share Purchase Mandate”) approved by shareholders of the Company at the annual general meeting held on 26 April 2024 (“Off-Market Equal Access Offer” or the “Offer”) to further reward Shareholders as part of its 60th anniversary celebrations.


Conclusion & Recommendation

While the $1.25 price represents an attractive premium of 20% over its VWAP price over the past 5 days, we note that its still at a “significant” discount to its NAV of $4.27. In late Dec’23 to early Jan’24, OUE’s share price hit a high of $1.20 before falling to its low of $1.02 due to the reduced expectations of interest rate cuts by the US Federal Reserve. We recommend investors to accept 10% of their holdings to the “equal access offer” at $1.25 and using the proceeds to arbitrage by buying back in the open market at prices trading below those levels. Longer-term shareholders can continue to “HOLD” onto OUE shares given that its NAV is at a significant premium at $4.27 (ie price to NAV is only 0.25x). We note that there is currently no coverage on Bloomberg for OUE Ltd.

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