buysellhold july.23




Improving EBIT warrants lower discount


■ We think Singtel is primed for double-digit core net profit growth over FY25- 26F, backed by EBIT recovery and associate profit growth (Bharti driven).

■ With DC profits set for a strong ramp-up from 2026F, we now value Nxera separately in our SOP valuation at a S$4.4bn EV (in line with KKR deal).

■ Reiterate Add at a higher TP of S$3.30. HoldCo discount could narrow further on meaningful EBIT recovery and material value unlocking, in our view.


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Oil & Gas - Overall

GloBE impact on PCG, MISC and Yinson


■ Maintain Overweight on the O&G sector (MISC included), with Add calls on MISC, Dialog, Yinson, Bumi Armada, Dayang, Velesto and Wasco.

■ The GloBE tax rules, which will come into effect in Malaysia and Singapore on 1 Jan 2025F, may have limited impact on our stocks, based on our study.

■ The FY25F core EPS forecasts for Yinson and MISC may be negatively affected by 1-2%, though the future risk to Yinson is greater.



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Singapore Strategy

If Trump wins


Risks abound, but Singapore may be a relative winner

A potential Trump presidential victory could result in an escalation of the US-China trade & tech war, while also raising global tariffs and protectionist policies. Singapore is unlikely to be spared. Yet an existing US-Singapore FTA, a big bi-lateral trade deficit and diversified imports may blunt the sharpest corners. Banks are likely to benefit from facilitating North-South and South-US flows, while industrials could see upside from onshoring and US fiscal stimulus. Manufacturing and Internet could also see opportunities. REITs – especially those with China and FX exposure - may see downside risks. Top Trump 2.0 picks: CSE, OCBC, SEA, STE, UOB. 



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Telecommunications – Singapore

1Q24: Results Largely In Line; Expect Continued Earnings Growth In 2Q24


For 1Q24, the sector’s 16% yoy earnings growth was within expectations, driven by strong contributions from Singtel’s regional associates, ongoing realisation of Starhub’s DARE+ benefits and better overall cost discipline. In 2Q24, we expect a lower but decent sector earnings growth of 8% yoy, backed by Singtel’s regional associates and Optus. We like Singtel’s regional exposure, Starhub’s attractive valuation and NetLink’s defensive earnings. Maintain OVERWEIGHT. 



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AEM ($1.85, up 0.03) a global leader in test and handling soluƟ ons, announced today the launch of a new burn-in capability for its highparallel test plaƞ orm, AMPS. The new variant, named AMPS-BI, is a high-power, high-throughput, fully automated burn-in system featuring patented advanced mulƟ -zone Intelligent Thermal Control. 

“As pioneers in the industry in providing cost-effective, highly parallel, modular automated test and handling solutions and with over a thousand systems installed worldwide for Burn-In and System Level Test, we are committed to delivering innovaƟ on and excellence to semiconductor testing,” said Amy Leong, Chief Executive Officer of AEM. “I am incredibly proud of our team for developing this new generation of Burn-In (BI) systems, which will signifi cantly help AI chip designers, foundries, and OSAT customers accelerate their roadmaps.” Earlier this year, AEM announced that its burn-in test system has been selected as the Plan-of-Record soluƟ on by a major fabless provider of high-performance compute (HPC) and arƟ fi cial intelligence (AI) chips.

At its last close of $1.85, market cap is $578mln and AEM trades at a forward PE of 20x, price to book of 1.3x. Bloomberg consensus 1 year target price of $2 implies limited upside. HOLD.



We highlight the key points from UOB’s ($32.87, up 0.34 cents) latest investor presentation slides released on SGX Net last night:


Why UOB?

1. Stable Management - UOB has proven track record in steering the bank through various global events and crises and stability of management team ensures consistent execution of strategies

2. Integrated regional platform - UOB is a truly regional bank with full ownership and control of regional subsidiaries and it’s entrenched domestic presence and deep local knowledge to address the needs of our targeted segments

3. Strong fundamentals - UOB boasts Strong Common Equity Tier 1 capital adequacy raƟ o of 13.9% as at 31 March 2024 and has diversifi ed funding and sound liquidity, with 82.0% loan/deposit ratio

4. Balance growth with stability - Over 50% of Group’s earnings from home market of Singapore (AAA sovereign rating) and UOB continues to diversify portfolio, strengthen balance sheet, manage risks and build core franchise for the future

UOB’s market cap stands at S$55.0bln and currently trades at 9-10x forward PE and 1.2x PB, with a dividend yield of just over 5%. Consensus target price stands at S$33.60, representing just over 2% upside from current share price. We maintain HOLD on UOB. 

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