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MAYBANK KIM ENG |
MAYBANK KIM ENG |
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Singapore Telcos The curious case of Singapore’s telco space
Competition may remain elevated; D/G STH to HOLD Post post-Covid recovery, we see competition in the mobile and fixed broadband (FBB) space inching up. While mobile consolidation was a hope of competitive rationalisation, Simba’s improving fundamentals, balance sheet scale and wide ARPU gap vs. incumbents suggest it is favourably placed to continue to take market share. In a saturated SG telco space, incremental share may come at the cost of incumbents. With 41% of Starhub’s revenue exposure to mobile+FBB, we see a bigger growth overhang anchored by Simba. We D/G Starhub to HOLD and cut our TP to SGD1.30 (from SGD1.44) as we trim our NPAT est. 4-5% on lower mobile/FBB growth expectations. Less than 10% of Singtel’s SoTP is SG consumer driven and it remains relatively shielded. Retain BUY on Singtel.
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CDL Hospitality Trusts (CDREIT SP) Normalising growth
Upside from rate cuts, recovery in visitor arrivals CDREIT reported 3Q NPI of SGD36.3m, -6.8% YoY. High base of last year, incoming supply, and higher expenses crimped the top line. RevPAR performance was uneven across markets. Singapore RevPAR was down on the year due to lower room rates. Gearing and debt cost rose sequentially. While growth in demand is past its peak, upside remains from recovery of visitor arrivals to pre-pandemic level, lower borrowing expense and contribution from the build-to-rent project. Further, valuation is reasonable at a 6.5% FY25E yield and 0.6x P/BV. Maintain BUY.
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MAYBANK KIM ENG |
MAYBANK KIM ENG |
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CDL Hospitality Trusts (CDREIT SP) Normalising growth
Upside from rate cuts, recovery in visitor arrivals CDREIT reported 3Q NPI of SGD36.3m, -6.8% YoY. High base of last year, incoming supply, and higher expenses crimped the top line. RevPAR performance was uneven across markets. Singapore RevPAR was down on the year due to lower room rates. Gearing and debt cost rose sequentially. While growth in demand is past its peak, upside remains from recovery of visitor arrivals to pre-pandemic level, lower borrowing expense and contribution from the build-to-rent project. Further, valuation is reasonable at a 6.5% FY25E yield and 0.6x P/BV. Maintain BUY.
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Civmec Ltd (CVL SP) Stable performance
1Q25 results in line; D/G to HOLD with higher TP Civmec reported flattish 1QFY25 NPAT of AUD15.2m, in line with our expectation at 25% of MIBG’s full-year forecast. As such, we leave our FY25-27E earnings forecasts unchanged. The group successfully completed the redomicile of its parent company to Australia as of 4 Sep 2024. This move has somewhat narrowed the valuation gap with its Australian peers. We thus raise our TP to SGD1.20, based on a higher PER of 11.5x (c.20% discount to sector average). But due to the stock’s recent outperformance, we downgrade Civmec to HOLD from BUY given limited upside.
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UOB KAYHIAN |
UOB KAYHIAN |
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REITs – Singapore 3Q24: CLAR’s Results In Line; SUN’s Results Below Expectations
BUY CLAR (Target: S$3.74) for consistency in generating positive rental reversion and value creation through redevelopment projects. HOLD SUN (Target: S$1.13) as valuation is fair with 2025 distribution yield at 5.3% but aggregate leverage is elevated at 42.3%. Maintain OVERWEIGHT on the sector
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Aztech Global (AZTECH SP) 3Q24: Misses Expectations; Outlook Appears Unexciting
Aztech’s 3Q24 earnings slumped 56% yoy and qoq to S$14m, bringing 9M24 earnings to 56%/55% of our/consensus estimates and missing expectations. Revenue dropped 20% yoy on poorer customer demand. Orderbook declined to S$142m as at 1 Oct 24 (vs S$304m as at 30 Jul 24), with the majority planned for completion in 2024, signalling a weaker 4Q24. Downgrade to HOLD with a lower target price of S$0.90 (S$1.25 previously) as we expect near-term headwinds.
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