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UOB KAYHIAN |
UOB KAYHIAN |
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STRATEGY – SINGAPORE Alpha Picks: Strong Beat; Add LREIT To Our Portfolio
For Jun 24, our Alpha Picks portfolio rose 0.3% mom on an equal-weighted basis, beating the STI by 0.4ppt. On a quarterly basis, our portfolio also rose 7.5% qoq and bettered the STI by 4.1ppt. The outperformance was driven by ST, FRKN and CENT, while MPM, CSE and GENS underperformed in Jun 24. Our Alpha Picks portfolio has now outperformed the STI in five out of the past six months. For Jul 24, we add LREIT to our Alpha Picks portfolio.
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Banking – Malaysia Loans Growth Momentum Slows
Loans growth edged downwards to 5.8% (Apr: 6.1%) on slower business loans growth. We anticipate a 5.5-6.0% system loans growth for 2024, implying a 1.15x loans to the GDP growth multiple which is in line with its 10-year mean. We find the sector’s risk-toreward to be well balanced in the absence of strong catalysts. The sector’s 2024 earnings growth is expected to lag that of the broader equity market. Maintain MARKET WEIGHT with CIMB being our top pick within the sector.
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CGS CIMB |
CGS CIMB |
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Singapore Strategy Jun 24 – Singapore in 5
■ The SIMSCI closed Jun 2024 at 314.78 pts, up 5.03 pts (+1.6%) mom. ■ May 24’s non-electronic exports surprises on the upside, lifts NODX. ■ We maintain our end-CY24F SIMSCI target of 313.35 pts, based on 14x FY24 P/E.
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Banks A speedbump in growth trajectory
■ Banking system loans pulled back 0.6% yoy in May 24, a speedbump following the previous 2 months of optimistic growth. ■ System deposits slowed to grow 4% yoy in May 24. FDs returned into focus, tilting the split of system CASA and FDs to 49:51. LDR ticked lower to 68%. ■ Reiterate sector Neutral. Delayed Fed Funds Rate cuts provide optimism to banks’ FY24F business outlook. SG banks’ c.6% dividend yield is attractive.
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| LIM & TAN | LIM & TAN |
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ISOTeam Ltd ($0.063) an established and leading player in Singapore’s building maintenance and estate upgrading industry has secured seven new projects worth approximately S$21.4 million. With the latest wins, the Group’s order book stands at S$182.4 million. At 6.3 cents, ISO is capitalized at $66mln and trades on Bloomberg consensus forecasted FY ended June’24 PE of 13x and FY ending June’25 PE of 9.4x. After several years of losses and absence of dividends, the company’s 20-30% div payout ratio policy suggests that dividends could resume again soon as they turnaround into profits after the recent capital reduction “corporate action plans”. Though small, it would be a welcome relief for long suffering shareholders who had to go through several years of losses post Covid-19 and the absence of dividends as well as a 1 for 1 rights issue completed last year at the rights issue price of 3 cents per share. Lim and Tan will be hosting a webinar for ISO Team’s key management team this coming Thursday. Please contact your sales executive or Lim and Tan Sec TR BU department for more details and for access to the zoom link.
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Singapore Mainboard and Philippine Stock Exchange dual listed Del Monte Pacific Limited / DMPL ($0.103, up 0.003) reported today its fourth quarter FY2024 results ending April. For the quarter, DMPL generated sales of US$597.3 million, up 2% on robust S&W fresh and packaged pineapple sales in Asia which offset lower sales in USA by subsidiary Del Monte Foods, Inc. (DMFI). Reflecting the weak fundamental performance, widening losses and absence of dividend payment, DMPL’s share price has halved from its 52-week high to 10.3 cents giving it a market cap of $200mln and price to book is 0.6x. Several brokers who used to cover DMPL has dropped/ceased coverage on the stock due to its weak fundamentals. While this has caused a halving in its share price from its 52 week high, management’s warning of further losses in FY’2025 albeit at a narrower amount of losses suggest that investors can still wait or look elsewhere. |
