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OCBC INVESTMENT RESEARCH |
PHILLIP SECURITIES |
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City Developments Ltd Rating BUY (as at 15 August 2024)
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HRnetGroup Limited Hiring still sluggish
▪ Earnings were below our expectations. 1H24 revenue and adjusted PATMI were 47%/37% of our FY24e forecast. 1H24 adjusted PATMI declined 16% YoY to S$21mn. Professional recruitment remains the weakest segment with revenue declining 16% YoY and volumes down 20%. ▪ Flexible staffing revenue was more stable with a 1.3% YoY decline. Clients have become more careful in hiring decisions and rely more on flexible staffing for their hiring needs. ▪ The two largest markets for professional recruitment are Singapore and China. Both markets are facing clients cautious about their hiring plans and candidates cautious about switching jobs. The hiring environment has been weaker than expected. We decreased our FY24e adjusted PATMI by 6% to S$53.5mn, with revenue lowered by 2%. Our BUY recommendation is maintained but the target price lowered from S$0.85 to S$0.82. We benchmark our valuations to 11x PE ex-cash FY24e. It remains a discount to global peers trading at an average PE of 21x PE and 9x EV/EBITDA.
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PHILLIP SECURITIES |
MAYBANK KIM ENG |
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Prime US REIT Refinancing finally complete
▪ 1H24 results were within expectations. Gross revenue/distributable income was 47%/45% of our FY24e forecast. DPU of 0.18 US cents missed our estimates as Prime paid out only c.10% of DI in 1H24, compared to our initial assumption of 25%. ▪ Completed the major refinancing exercise on 9 August 2024 with a US$550mn credit facility. This new facility has an initial maturity in July 2026, with an option to extend for an additional year. The facility will be used to repay S$504.3mn of loans, with the balance for working capital and capital expenditure.
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ST Engineering (STE SP) Good execution
Capitalising on strong order book, reiterate BUY STE reported 1H PATMI of SGD336.5m, +10% HoH/+19.9% YoY. Growth was driven by mid-teens top-line growth and better margins. Barring SATCOM, other business segments saw healthy revenue growth of low to high teens. New order wins in the quarter came in at a similar level as the prior quarter, resulting in further order book growth. With healthy order book and continued cost controls, STE is on track to deliver mid-teens earnings growth over next 12 months while offering a mid-single digit yield. We lift our TP to SGD4.80 from SGD4.60. BUY.
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| MAYBANK KIM ENG | MAYBANK KIM ENG |
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Genting Singapore (GENS SP) Sequentially weaker but was expected
Maintain BUY call and SGD1.10 DCF-TP After a bumper 1Q24 driven by a very high VIP win rate, 2Q24 was weaker QoQ on lower VIP win rate and seasonally lower non-gaming revenue. Yet, we had largely expected this and flagged it in our 1Q24 results note. We expect 3Q24 and 4Q24 to be seasonally stronger. The return of the former Hard Rock Hotel in early 2025 also ought to attract more premium gamblers. Our earnings and dividends estimates are unchanged. We still like GENS for its post-COVID earnings recovery and 5% dividend yields.
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StarHub (STH SP) 2Q24: A decent pickup
Decent delivery, led by enterprise services 2Q24 NPAT (ex DÇrypt) increased 9% YoY/8% QoQ. Reported NPAT is tracking at 50%/49% of MBIG/Street full-year forecasts. 2Q service revenue increased 3% YoY/5% QoQ, led by strong enterprise services but partially offset by a softer consumer segment. Mobile revenue declined 4% YoY but stabilized QoQ. Enterprise services remain the key growth driver, posting 11% YoY/QoQ growth in revenue, mainly led by cybersecurity services. EBITDA (ex DÇrypt) grew by a healthy 2% YoY/9% QoQ. Starhub declared SGD3c in interim dividends but we see potential for a bigger final dividend, translating to a 6% annualized dividend yield. BUY.
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