ANALYSTS SAY: Buy, Sell, Hold (25 Sept)

UOB KAYHIAN

UOB KAYHIAN

DFI Retail Group Holdings (DFI SP)

A Millstone Removed

DFI announced that it will divest its entire 21.1% stake in its loss-making Yonghui Superstores to a subsidiary of the Miniso Group for Rmb4.5b (US$637m), subject to regulatory approvals. While this may result in a US$128m write-down for 2024, we view this as a positive move as it enables the company to exit from a very tough market in China and instead focus on higher returns businesses and potentially pay a special final dividend. Maintain BUY. Target price: US$2.57.

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Scientex (SCI MK)

4QFY24: Capping Off A Stellar Year

Scientex recorded record-high earnings in FY24, underpinned by a strong showing from its property division. The packaging segment also managed to sustain its performance despite a challenging environment as improving demand for industrial packaging managed to offset the slowing consumer segment. Looking forward, we expect the property division to be the main driver of growth as Scientex continues to increase its landbank. Maintain BUY with a higher target price of RM5.08. 

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CGS CIMB

CGS CIMB

DFI Retail Group

Disposing of its entire 21% stake in Yonghui

■ DFI has announced the sale of its entire 21% stake in its associate Yonghui to Miniso Group for cash consideration of Rmb4.5bn.

■ The transaction will likely lead to a US$128m loss for DFI and is its third grocery business divestment in three years, after Indonesia and Malaysia.

■ Reiterate Hold and TP of US$1.85. 

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Sime Darby Bhd

Capitalising on domestic tailwinds

■ We estimate that Malaysia-based PBIT contribution will increase from 24% in FY23 to 60% by FY25F, thanks to currency benefits and full UMW impact.

■ While translation of overseas profits will impact PBIT due to RM gains, we estimate margin benefits for Malaysia Motor and UMW more than offset this.

■ Reiterate Add with a higher SOP-based TP of RM3.60. Despite the notable currency benefit, the stock trades at just 9.5x FY25F P/E and yield of ~5%.

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United Overseas Bank Ltd
 

Rating HOLD (as at 24 September 2024)
Last Close SGD 33.25
Fair Value SGD 33.50
Share price hit new high

• UOB’s share price touched a new all-time high of SGD33.38 on 23 Sep 2024. Despite the softer interest rates outlook, the stock is up 17% year-to-date (YTD).
• Annualising the interim dividend per share (DPS) of SGD0.88, this gives a current dividend yield of 5.3%.
• Singapore market’s recent re-rating is likely due to the hunt for better yields.

Investment thesis
United Overseas Bank Ltd (UOB) posted a record set of results in FY23, benefitting from higher net interest income (NII) as well as the enlarged retail business from the addition of Citigroup’s consumer businesses in Malaysia, Thailand, Indonesia and Vietnam. Apart from NII, its performance was also boosted by higher credit card income, which accounted for one-third of its fee income in FY23. Its wider market footprint is likely to be well-positioned to further drive cross-selling of products and services, which will in turn benefit its wealth and
related businesses. Total assets under management (AUM) amounted to SGD176b in 2023. The group remains focused on growing its ASEAN franchise. For 2024, management is guiding for low single-digit loan growth, double-digit fee growth and for cost-to-income ratio to stay at around 41% to 42% (FY23: 41.5%).

Singapore Industrials

ASEAN power integration – a step forward

Doubling power import capacity under the LTMS-PIP

Following the launch of LTMS-PIP in June 2022 to import 100MW of renewable hydropower in the first phase, Singapore further enhanced the capacity of electricity traded to 200MW with additional supply coming from Malaysia. In conjunction, EMA has renewed Keppel’s electricity importer license for 2 years to 2026. Regional power grids will be one of the key switches to enable Singapore’s energy transition. Reiterate BUY on SCI SP as a pure-play proxy on energy transition theme.

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