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CGS CIMB |
CGS CIMB |
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CapitaLand Integrated Commercial Deepening its footprint in the Orchard area
■ CICT is proposing to buy a 50% interest in ION Orchard for S$1,848.5m. ■ We think the deal is positive for CICT as it will deepen its prime Orchard area footprint. Maintain Add with an unchanged DDM-based TP of S$2.21. Buying a 50% stake in ION Orchard CICT is proposing to acquire a 50% interest in ION Orchard from its sponsor Capitaland Investment, for S$1,848.5bn, based on the buyer-seller agreed property value of S$3,697m. ION Orchard is an iconic mall located along Orchard Rd and has a net lettable area of 623.6k sqft. The translates to a gross yield of 7.1%. The deal is subject to unitholders’ approval at an EGM, which management expects to happen in Oct or earlyNov 2024, with a view towards transaction completion by 4Q24F.
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Seatrium Ltd Laggard pick with strongest 2H24F recovery
■ We hosted STM’s management in KL recently. We remain positive on the group’s efforts to improve margins and profitability. ■ Most FAQs by investors were on: 1) the progress of legacy projects and further provisions, 2) order outlook, and 3) CAD/MAS information requests. ■ STM remains a country top pick given its YTD underperformance. In a market where laggards could prevail, positive newsflow could be a catalyst. ■ Reiterate Add and TP of S$2.69, still based on its 10-year average trading band of 1.5x CY24F P/BV. Key risk: significant project cost overrun.
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PHILLIP SECURITIES |
UOB KAYHIAN |
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Phillip Singapore Monthly – Aug24 REITs take leadership
• Singapore equities were down 0.4% in August following the 3.7% jump last month. Sectors that outperformed were REITs, real estate and healthcare. Weakness was in cyclicals such as marine and transportation. • Interest rate sensitive stocks were re-rated as the Federal Reserve is certain to cut rates in the upcoming 18 September FOMC meeting. The debate is whether it will be one or two rate cuts depending on upcoming payrolls.
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Food Empire Holdings (FEH SP) 1H24: Margins Hampered By High Coffee Costs And Excess Inventory; Downgrade To HOLD
FEH’s 1H24 PATMI fell 11% yoy to US$24m, in line with expectations and forming 51% of our full-year estimate. The fall was mainly due to higher coffee bean prices and shortterm price disruptions in the Russia market. Strong revenue growth of 14% yoy was recorded, driven by double-digit sales growth from most of its core markets. As elevated coffee bean prices and Russia’s price disruptions are pressuring margins, we downgrade to HOLD with a lower target price of S$1.00 (S$1.30 previously).
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| UOB KAYHIAN | UOB KAYHIAN |
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Property – Malaysia 2Q24 Results Round-up: Results Mixed; Record Property Loan Approvals For Jul
In 2Q24, earnings results of the companies we cover were mixed (50% in line, 37.5% fell short, and 12.5% beat expectations). We expect a stronger 2H performance, backed by higher sales from more launches. Notably, BNM data for Jul 24 recorded a monthly high in both residential and non-residential property loans approved. Maintain OVERWEIGHT. Top picks: Lagenda, IOIPG and Mah Sing.
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Aviation – China Airlines: Expecting A Turnaround In 3Q24; Overcapacity A Medium-term Risk
The three major airlines were still loss-making in 1H24, with CSA’s net profit standing at the lower end of its guided loss range, while Air China and CEA were near the midpoint. The three airlines should make a turnaround in the seasonally strong 3Q24, helped by the recent fuel price weaknesses. However, overcapacity remains a medium-term challenge and is not helpful for the airlines’ balance sheet repairments. Maintain UNDERWEIGHT. Top pick: CSA.
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