buysellhold july.23



Daiwa House Logistics Trust (DHLT SP)
Growth From Logistics Assets In Japan And Southeast Asia

DHLT owns 17 high-quality logistics properties in Japan with total NLA of 4.9m sf. It benefits from the growth of the third-party logistics and e-commerce sectors, which accounted for 75.7% and 8.1% of its GRI respectively. DHLT is expanding in Japan and Southeast Asia by tapping its sponsor’s pipeline. It made its maiden foray overseas by acquiring cold storage facility D Project Tan Duc 2 in Vietnam for VND483b (S$26.5m). DHLT trades at an attractive 2024 distribution yield of 8.9% and P/NAV of 0.83x.


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Slew of data centre deals announced

■ Singtel announced two data centre deals: 1) a 4.2% stake investment in STT GDC, and 2) a JV formation with TM to develop data centres in Johor.

■ We view both deals as positive drivers for investor sentiment, as Singtel is better positioned to capitalise on rising data demand in the ASEAN region.

■ Reiterate Add at an unchanged SOP-based TP of S$2.90. Singtel will be sharing more details via an analyst brief at 9am on 19 Jun 24.


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DBS Research

Sunny Optical (2382 HK)
Takeaways From 2024 Investor Day

Sunny has turned more positive on the smartphone market in 2024, forecasting a 3.5% yoy growth in global smartphone sales. The company provided more clarity on its exposure to AI, highlighting the potential of XR applications, machine vision and smartphone optical component upgrades directly driven by AI smartphones. We remain confident in Sunny’s recovery story in 2024-26, and the Investor Day should boost confidence in the market. Maintain BUY and target price of HK$63.00.


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Café de Coral (341.HK)
FY3/24 results in-line with profit alert 

  • Final DPS of HK42cents declared, with dividend payout normalising to 101% in FY3/24

  • In view of weaker than expected economic recovery in HK, as well as surge in northbound consumption spending, the Company aims to raise productivity through labour optimisation, and digitalisation to drive stability in margins. Our last rating stood at a BUY with TP under review.

Café de Coral (341.HK) (CdC) released FY3/24 net earnings growth of 199.5% y/y to HKD330m, in-line with earlier profit alert.  Excluding COVID-19 subsidies, FY3/24 net earnings rose 376.1% y/y. FY3/24 revenue rose 8% y/y to HKD8,691m. By geography, HK sales rose 7% y/y to HKD7,176m, driven by growth across institutional catering (+18% y/y), quick service restaurants (+7% y/y) and casual dining (+2.5% y/y). Mainland China recorded 14.5% y/y growth to HKD1,515m over the same period, lifted by same store sales growth. 

GP margin expanded by 2.6ppt to 11.4% in FY3/24, driven by effective cost control and manpower productivity.  The Company recorded final dividend of HK42 cents (FY3/23: HK28cents), implying full-year dividend payout of 101% (FY3/23: 201.7%), normalising to former pre-covid level payout levels. This reflects the Group’s confidence in sustaining steady operations and supported by strong financial position. 



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Partners Telekom Malaysia for Data Centre

  • Singtel and Telekom Malaysia (TM) to build a data center campus in Malaysia.
  • Malaysia is the fastest-growing data center market in Southeast Asia led by availability of  renewable power and lower costs.
  • Maintain BUY on Singtel with an unchanged TP of S$3.50 for over 35% upside potential and 6% yield. This partnership is part of the initiative to grow the core operating profit from Singapore & Australia over the next 2-3 years, which has a high correlation with Singtel's share price. 

Singtel and Telekom Malaysia (TM) to build a data center campus in Malaysia. Nxera, the regional data center arm of Singtel, has announced a partnership with TM in a joint venture to develop data centers in Malaysia starting with an AI-ready data center campus in Johor, just 16 km from Singapore. Nxera and TM have agreed to commit up to RM1.15bn as initial capital for the Joint Venture (JV), ST Dynamo DC (Nxera MY – 49% and TM DC Educity – 51%). The JV will initially build a data center with 64MW capacity with the potential to expand to 200MW. With its proximity to subsea cable links between Singapore and Malaysia, the data center will be well-placed to support the increasing demand from both countries. This high-power density campus will be able to host large computing and AI capabilities such as requirements by cloud hyperscalers, and GPU-as-a-Service providers, and features liquid cooling to support high-power density workloads. In addition to data centers, the companies will expand the submarine cable connectivity between Singapore and Johor to enhance digital connectivity.

Malaysia is the fastest-growing data center market in Southeast Asia. We estimate a CAGR of 27% over 2023-2030 for the data center capacity of Malaysia led by (i) ample availabilty of renewable power as Malaysia targets over 37% of its total power from renewables in 2030 (18% in 2023), ii) Malaysia’s ample submarine connectivity to meet the demand spilling from Singapore and China with at a low latency required for AI workloads. Data-centre business is likely to be the key earnings growth driver for the next few years from FY26F onwards, once data-centre capacity comes onstream.



Telekom Malaysia
Data centre boost

■ Telekom Malaysia (TM) has announced a 51:49 JV with SingTel to develop a 64MW data centre in Johor with an ultimate capacity of 200MW.

■ The data centre investment will more than double TM’s effective data centre capacity and, at the very least, open a new avenue of growth for TM.

■ We see this investment as providing a valuation re-rating catalyst for TM’s shares, which trade at an undemanding 13.7x FY25F P/E

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