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CGS CIMB |
UOB KAYHIAN |
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Yangzijiang Shipbuilding Expanding orderbook via investment
■ YZJSB has acquired 34% of Tsuneishi Group (Zhoushan) Shipbuilding Co., Ltd. (TZS) for Rmb833m on c.1x FY23 P/BV. ■ TZS has 50 vessels in its orderbook - 46 bulk carriers and 4 containerships - with an orderbook amount of US$2bn based on market value of vessels. ■ YZJSB’s relationship with TZS started in 2022 when the latter acquired Mitsui E&S Shipbuilding which holds 44% in YAMIC. ■ We think there is room for collaboration to improve TZS’s gross margins and earnings contribution to YZJSB. Reiterate Add and TP of S$3.20.
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Keppel DC REIT (KDCREIT SP) Positive Momentum To Sustain Into 2H24 And 2025
KDCREIT clocked positive rental reversion of more than 40% for a major renewal contract in Singapore in 2Q24, a reflection of strong demand and tight vacancy locally. Large colocation leases with longer WALE of 3-4 years led to the astronomical positive rental reversion. The growth momentum is sustainable as capacity remains tight and it has several large colocation leases expiring in 2H24 and 2025. KDCREIT would benefit from rate cuts in 2025. Maintain BUY with a higher target price of S$2.28.
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MAYBANK KIM ENG |
LIM & TAN |
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Dyna-Mac (DMHL SP) Better to wait and see
Offer of SGD0.60/share Dyna-mac received a voluntary conditional cash offer from Hanwha Ocean SG Holdings for all the issued and paid-up ordinary shares for SGD0.60 per share, conditional upon Hanwha having more than 50% of the total shareholding. Our view is that the offer is fair but on the lower end of the fair value range. Given this is not a final offer, we think it would be better for investors to wait for a revised offer that is either closer or higher than our TP of SGD0.64. Our confidence stems from the robust outlook for FPSOs, Dyna-mac’s high net cash position, potential dividends and higher projected profitability in the next few years.
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Yangzijiang Shipbuilding (Holdings) Ltd. ($2.48, up 0.03), a globallyleading shipbuilding group based in China, and Straits Times Index component company listed on the SGX Main Board, announced today that it has entered into a joint venture agreement with Tsuneishi Holdings Inc. (“THD”) to acquire a 34% equity stake in Tsuneishi Group (Zhoushan) Shipbuilding Co., Ltd. (“TZS”) (the “Acquisition”) through a private share allotment. At $2.48, Yangzijiang is capitalized at $9.8bln and trades at 8-9x PE and yields just under 3%. Bloomberg consensus target price of $3.20 implies a potential 1 year return of 27%. While we continue to have a constructive longer-term view of Yangzijiang due to their robust orders, strong financial position and also leading industry position in the push towards building environmentally friendly ships and providing environmentally friendly logistics solutions, the stock price has already been a top performer, having risen a strong 67% this year alone, making it the best performer amongst STI component stocks. |
| LIM & TAN | MAYBANK KIM ENG |
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CapitaLand Investment Limited / CLI (S$2.87, up 2 cents), a global real asset manager, today announced several key executive appointments. The latest appointments are part of an ongoing process to strengthen CLI’s leadership team and accelerate the growth of the company’s private funds business, particularly in the areas of capital raising, data centre, special opportunities and renewables. CLI announced that Mr Simon Treacy, Chief Executive Officer (CEO), Private Equity Real Estate, will step down from his executive role with effect from 31 October 2024. He will be appointed Senior Advisor to Mr Lee Chee Koon, Group CEO of CLI, and will provide counsel to CLI’s private equity team on capital raising and investments effective from 1 November 2024. CLI’s market cap stands at S$14.3bln and currently trades at 20x forward PE and 1x PB, with a dividend yield of 4.2%. Consensus target price stands at S$3.50, representing 23% upside from current share price.
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Food Empire Holdings (FEH SP) New Vietnam facility
USD80m new freeze-dried facility in Vietnam FEH will invest USD80m in a new freeze-dried soluble coffee manufacturing facility in Vietnam. Construction is to begin in 1Q25 and is expected to complete by 2028. The new facility will have a larger capacity than the existing freeze-dried facility in India and will be funded by internal resources and bank borrowings. We believe that this is positive for the long-term outlook of the company and aids in its diversification of revenue, especially from Russia. Short-term wise, we may see some additional costs which may impact profitability. We maintain HOLD with an unchanged TP of SGD1.02.
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