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UOB KAYHIAN |
MAYBANK KIM ENG |
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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. |
Singapore Strategy Reflections 2024
AI, Laggards and Makeovers winning themes in 2024 The unexpected turned into the expected in 2024. Amid geopolitical, policy and market volatility, Singapore offered a safe-haven. Three key themes emerged that can influence medium-term earnings: (1) Early signs of AI-use cases are building. Banks and healthcare are likely to see the earliest impacts. Cyber-risks are also amplifying. (2) Laggard sectors are making come-backs, but armed with structural growth. Operations and maintenance (O&M) is enjoying renewed demand in a multiyear investment cycle. Similarly, the internet sector is seeing broadening of revenues as fintech reaches prime time. (3) Restructuring by the S-REITs and industrials are keeping up with structural shifts.
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LIM & TAN |
MAYBANK KIM ENG |
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Reuters reported that the world oil market will be comfortably supplied in 2025, the International Energy Agency (IEA) said on Thursday, even after producer group OPEC+ extended oil supply cuts and a slightly higher than expected demand forecast. The outlook from the IEA, which advises industrialised countries, points to continued headwinds for OPEC+, which comprises the Organization of the Petroleum Exporting Countries and allies such as Russia. OPEC+ is seeking to begin reviving output in 2025 after years of cuts. We continue to maintain a positive outlook on O&G counters such as Marco Polo Marine / MPM (S$0.054, unchanged) and even Seatrium ($2.01, up 1 cent) if investors wish to take a longer-term view. However, we reckon that the easy money has been made and MPM would need to achieve much better expected results in order to achieve further price appreciation. We maintain our positive view on the O&G outlook so long as oil prices can be sustainably maintained above US$60/barrel.
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Malaysia Gloves Sector 2025: A high stakes year
Recovery partially priced in; downgrade to NEUTRAL Malaysia’s glove sector is recovering, driven by inventory replenishment since early-2024 and is set to benefit from a higher 50% US tariff on Chinamade gloves from 2025 and 100% from 2026. This will boost utilisation rates and ASPs.
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