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UOB KAYHIAN |
LIM & TAN |
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Hong Leong Asia (HLA SP)
Undervalued Gem Backed By A Strong Positive Outlook
HLA is set to post strong earnings growth for 2024-26, driven by its two main segments. With significant market share across its key markets, the building materials segment faces a robust pipeline of mega infrastructure and HDB projects. Backed by favourable regulatory tailwinds, the diesel engine segment is on the verge of an earnings upcycle. In our view, HLA remains undervalued given the positive outlook for its businesses. Maintain BUY with an SOTP-based target price of S$1.11.
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AIMS APAC REIT / AAREIT (S$1.25, unchanged) is pleased to announce its advancement of several key sustainability initiatives. Sustainability remains a key focus at AA REIT. By embedding sustainability principles and frameworks across its business processes, AA REIT is building a future-ready and resilient portfolio. With the advancement of several ongoing sustainability initiatives, AA REIT is on track to achieve its long-term Science-based target initiatives (“SBTi”) goal to reduce scope 2 carbon emissions by 42% from FY2020 to FY2030. At $1.25, AAREIT is capitalized at $1.02bln and trades at 1.0x P/B and an attractive annualized yield of 7.5%. Ongoing AEIs at two of its logistics and industrial buildings in Singapore are expected to provide further income growth when completed in 1QFY26. With stable DPU performance expected coupled with consensus target price of $1.47 (implying potential upside of 18%), we maintain an “Accumulate” rating on AAREIT. |
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LIM & TAN |
UOB KAYHIAN |
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XMH Holdings (S$0.365, unchanged) has announced net profit of S$12.6mln for the 1HFY2025 ended October, up 94.5% from S$6.5mln the previous year. Earnings per share came in at 11.49 S cts, up from 5.91 S cts a year ago. The revenue in 1HFY2025 amounted to approximately S$66.9 million, a decrease of approximately S$4.1 million or 5.8% as compared to S$71.0 million in 1HFY2024. This was because Project segment recorded a decrease in revenue from S$24.7 million in 1HFY2024 to S$19.3 million in 1HFY2025.
XMH Holdings is capitalized at S$40.0mln at trades at an annualized P/E of 1.6x and P/B of 0.6x. Dividend yield stands at 9.6%. 1HFY25 net profit of $12.6mln has already slightly exceeded previous full year profits of $12.5mln. XMH has paid out 3.5 S cts in dividends last year and we see potential for higher dividends this year should the company continue on its positive trajectory. We note that the company has just exited the watchlist on 15th Nov 2024 after being in the watchlist for the past 5 years since 2019. The chairman has also been buying back shares in the company for the last couple of years with his last transaction in Sep’24 at an average price of $0.45/share. Given its low valuations, attractive yield and management’s optimistic outlook expectation, we recommend an “Accumulate” on XMH Holdings.
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Sapura Energy (SAPE MK) 9MFY25: Weakness On PLSV Reaches The Bottom
SAPE’s 9MFY25 core profit was in line, despite weaknesses seen in the rig and JV PLSV setbacks before transitioning to new multi-year contracts. Due to the high subsea demand, Sapura Esmeralda secured additional backlog for three months, at spot rates lucrative enough to consider more market opportunities. Supported by Paratus Energy’s outlook upgrade, our contrarian view is that the PLSV will anchor SAPE’s FCF recovery out of PN17 eventually. Retain BUY. Target price: RM0.07.
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UOB KAYHIAN |
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Gamuda (GAM MK) 1QFY25: In-line
Earnings in-line; maintain BUY 1QFY25 core net profit (CNP) of MYR205m was in-line, at 18% of our FY25E. We expect earnings to pick up in subsequent quarters on gradual margins enhancement from a rising mix of its Malaysia E&C projects; we thus make no change to our forecasts. A 10sen interim DPS (cum 1-for-1 bonus issue going ex- on 19 Dec) was also in-line. On rolling forward valuation and updating for latest balance sheet disclosures, our RNAV-TP is raised to MYR10.50 from MYR9.60, implying 22x FY26E PER (+1.5SD of mean). BUY.
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