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PHILLIP SECURITIES |
PHILLIP SECURITIES |
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SATS LTD Across the board tailwind
• SATS has successfully repriced the contract of one of its major customers, SIA, which accounted for 17.3% of FY24 revenue. The new contract took effect in 2Q25, and we expect at least a 5% rise, generating around S$45mn revenue. An additional S$6mn to S$9mn in revenue expected from the new cargo handling fee for inbound air cargo into Singapore, effective August 2024. Expect repricing to have direct benefit to earnings.
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CapitaLand Investment Limited Divesting ION Orchard
▪ CLI will be divesting its 50% stake in ION Orchard to its sponsored REIT, CapitaLand Integrated Commercial Trust (CICT SP, non-rated), for a sales consideration of c.S$1.08bn. ION Orchard is currently held in a JV with Sun Hung Kai Properties (SHKP), which holds the remaining 50% stake.
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UOB KAYHIAN |
LIM & TAN |
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REITs – Singapore Double Happiness In The Month Of September
The Fed has switched emphasis to supporting the labour market as “confidence has grown that inflation is on a sustainable path back to 2%”. The Jackson Hole Symposium has ushered in a new era of rate cuts. The simultaneous rate cuts in the US and the Eurozone in September are positive catalysts for S-REITs. Maintain OVERWEIGHT. BUY CLAS (Target: S$1.37), FLT (Target: S$1.48), KREIT (Target: S$1.20), MINT (Target: S$2.93) and MPACT (Target: S$1.76).
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ComfortDelGro / CDG ($1.43, up 2 cents) has announced that its Australian subsidiary, ComfortDelGro Corporation Australia Pty Ltd (CDC), through its subsidiary CDC Victoria Pty Ltd (CDC Victoria), has been awarded three franchises within the Victorian Department of Transport and Planning’s Metropolitan Zero Emission Bus (ZEB) Franchises tender process. With the latest win, CDC Victoria retains its existing contracts and adds new services across the west and northwest regions, representing a 30 percent growth in its Victoria Public Bus business. As a leading operator in Victoria, the company will serve 20 percent of Melbourne’s Metropolitan Network. CDG’s market cap stands at S$3.1bln and currently trades at 15x forward PE and with a dividend yield of 5%. We like that CDG has continued to grow it’s presence in its Australian market with this latest contract win and at the same time, book a profit on it’s 3 depots that are being transferred. We maintain an “Accumulate” rating on Comfort Delgro given that CDG continues to ride on the recovery of their taxi, bus and rail services post Covid-19, and that Management’s willingness to reward shareholders via sustained dividend increases with each passing financial year since the end of Covid-19 is also a major positive for investors. Bloomberg consensus 1 year target price is $1.66, representing 16% upside potential. |
| LIM & TAN | UOB KAYHIAN |
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CapitaLand Investment Limited / CLI ($$2.78, unchanged), a global real asset manager, has unveiled a target to more than double its funds under management (FUM) in its core market India by 2028, up from S$7.4 billion (INR 458.8 billion) as at 30 June 2024. CLI’s market cap stands at S$14.0bln and currently trades at 18.6x forward PE and 1.0x PB, with a dividend yield of 4.5%. Consensus target price stands at S$3.50, representing 30.1% upside from current share price. For CLI, we continue to maintain an “Accumulate” recommendation as we continue to like its efforts to unlock value following the likes of Keppel / SCI. With the negativity priced in and share buybacks in place, CLI continues to grow its stable recurring income streams, and we believe dividends at these current rates are sustainable.
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STRATEGY – MALAYSIA Alpha Picks: Adapting To A Bipolar Market
Our Alpha Picks sorely underperformed the bank rally-driven FBMKLCI in Aug 24 (-9.2% vs +3.2%), as most performing stocks in 1H24 succumbed to further heavy profit-taking during the month even after FBMKLCI’s swift recovery from “Black Monday”. Given the bipolar market, our September Alpha Picks embrace a blend of event-driven and defensive (best proxied by banks) picks. Sep 24 picks: Alpha IVF*, EcoWorld*, Gamuda, Lagenda, MYEG, Pekat, Public Bank*, RGB, VSI and Yinson* (*denotes new inclusions).
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