buysellhold july.23



Civmec (CVL SP)

3QFY24: Results In Line With Expectations; Record-breaking Quarter


Civmec’s record-high 3QFY24 earnings of A$17m (+17% yoy) is in line with our expectation, with 9MFY24 forming 78% of our full-year estimate. Its orderbook remains robust with strong tendering activity across all sectors, while its new Port Hedland facility and upcoming Gladstone facility expansion are expected to drive growth. We continue to like Civmec for its strong growth potential and attractive 6% dividend yield. Maintain BUY and target price of S$1.23.



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Lagenda Properties (LAGENDA MK)

1Q24: Results Within Expectations; Expect Better Earnings From 2Q24 Onwards


Lagenda’s 1Q24 revenue and net profit grew 25% and 9%, respectively, within our expectations. It achieved RM222.6m sales in 1Q24, on track to achieve its sales target of RM1.2b. 1Q24 launches were worth RM127m in Tapah, Perak with take-up rates of >80%. Also, Lagenda has launched substantial products in Apr and May 24 amounting to RM702m (ytd launches: RM829m), on track for its target launch of RM1.9b. Maintain BUY. Target price: RM2.32.



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Seatrium ($1.72, up 18 cents) today released its voluntary business update for the first quarter 2024 (1Q 2024). In 1Q 2024, Seatrium delivered Brassavola, Singapore’s first Membrane LNG Bunker Vessel and completed 67 Repairs & Upgrades projects. Year-to-date 2024, the Group achieved order wins of over S$11.4 billion, driven by the newbuild FPSO platforms P-84 and P-85 for Petrobras as well as other new orders which include the Sparta FPU newbuild for Shell Inc., topsides integration contract from MODEC for the Errea Wittu FPSO, and topsides fabrication and integration contract from SBM Offshore for the Jaguar FPSO. In addition, the Group was informed by TenneT TSO B.V. that it plans to commence work on the third 2-gigawatt High Voltage Direct Current (HVDC) electrical transmission system by June 20242 . The current net order book stands at S$25.8 billion.

Seatrium’s market cap stands at S$5.9bln and trades at 0.9x PB. It is currently loss making and does not pay dividends. Consensus target price stands at S$2.80, representing 62.8% upside potential. Although Seatrium has won numerous contracts, the contributions from the completed contracts will only show much later and would also depend on Seatrium’s successful delivery/execution of contracts. Bottom-line is expected to be a profit of $200m in FY24 (26.5x FY24 PE) and we see Seatrium being positioned as a turnaround play by the market. Maintain “Accumulate”.


Frencken Group Ltd (FRKN SP)

AMAT partnership to drive more growth


Maintain BUY and TP of SGD1.77

We believe that Frencken will likely be the key beneficiary of its strategic partnership with AMAT in the next few years and will likely win more nextgeneration new products introductions (NPI). AMAT is seeking to expand its Singapore operation with a new SGD600m facility and its outlook is still positive in its recent 2Q24 results release. We also believe the ramp up of some of these existing NPIs should start by FY25E which could potentially see Frencken’s growth leapfrog going forward. In our view, it is the best proxy for a semi-con recovery even for FY24E and remains our Top Pick in the SG tech sector.



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Singapore Telecommunications (ST SP)

Optus raises post-paid prices by 5-19%


Raise our EPS / FCF 1-2%; signals easing competition Optus today raised prices of its postpaid mobile plans by 5-19%. We estimate this will increase FY25-27 Singtel group EPS and FCF by 1-2%. We think the price increases indicate competition in the sector has become more rational, and the backlash from customers caused by Optus’ network outage in Nov’23 has subsided. Maintain BUY due to better growth outlook and firm forward yield of 7% with high visibility. 



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AirAsia X Bhd (AAX MK)

From Beijing with love


Maintain BUY with higher TP of MYR1.88 (+24%) After a lacklustre FY23A, the Chinese market drove 1Q24 results to way above our expectations. We maintain our earnings estimates pending a meeting with management. Note that we have yet to impute any upside from the upcoming acquisition of CAPITALA’s 4 airlines and contribution from TAAX. We roll forward valuation, pegging on 7x FY25E PER (industry average ex-Interglobe, Spring and VietJet) from 8x FY24E PER and raise our TP to MYR1.88 from MYR1.52.



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