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CGS CIMB |
UOB KAYHIAN |
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Singapore Strategy Jan 25 - Singapore in 5
■ The SIMSCI closed Jan 2025 at 387.97pts, up 15.44pts (+4.14%) mom. ■ MAS eases S$NEER slightly in scheduled review; we believe there is room for further easing. ■ We maintain our CY25F MSCI target of 409.3pts, based on 15x CY25F earnings.
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Offshore Marine – Singapore A New Year And A Rehash Of An Old Mantra
The new Trump presidency and its rehashed mantra of “drill baby drill” should benefit the Asian O&M sector, assuming that higher levels of global offshore activity lead to tightness in the market that thus push up rig and OSV day rates. In our stock universe, we highlight that Seatrium has shipyard assets in the US and thus could see betterthan-expected order wins given the pro-America sentiment in the US at present. Maintain OVERWEIGHT on the sector. Top picks are Seatrium and Marco Polo Marine.
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UOB KAYHIAN |
CGS CIMB |
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REITs – Singapore S-REITs Monthly Update (Jan 25)
S-REITs have to weather the turbulence and turmoil caused by the escalation of trade conflicts in the near term. The Fed also appears to be in no hurry to cut interest rates. Nevertheless, many blue-chip S-REITs have already corrected and are trading at attractive yields of 6-7%. Maintain OVERWEIGHT. BUY data centre REIT DCREIT (Target: US$0.93), logistics REIT FLT (Target: S$1.33), retail REIT LREIT (Target: S$0.77) and hospitality REIT CLAS (Target: S$1.38).
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Genting Singapore Vying for precious tourists
■ Marina Bay Sands (MBS) reported 4Q24 hold-adjusted EBITDA (adjusted for win rate) of US$535m (+13.1% yoy) on record-high mass GGR. ■ We expect GENS to report 4Q24F adj. EBITDA of S$197.4m (-13.1% yoy) due to a lower normalised win rate and lower room inventory against 4Q23. ■ Reiterate Add; TP unchanged at S$1.05, pegged to 8x FY26F EV/EBITDA, 0.5 s.d. below its 5-year mean due to uncertainty in SG tourism’s growth.
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| LIM & TAN | LIM & TAN |
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Sembcorp Industries / SCI ($5.58, up 15 cents) reported that its whollyowned subsidiary, Sembcorp Energy Philippines, has signed a share purchase agreement with CleanCurrent Renewable Energy Inc (CREI) to acquire 100% of CREI’s shares in Puente Al Sol for $105 million. SCI’s market cap stands at 9.9bln and currently trades at 10.5x forward PE and 2.0x PB, with a dividend yield of 2.5%. Consensus target price stands at S$6.80, representing 21.9% upside from current share price. Despite global carbon emissions reduction, we continue to see scarcity premium in SCI given high demand from institutions for “Green/Sustainable” investing themes. As such, we maintain an Accumulate rating on SCI.
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We highlight the key points in this morning’s Business Times publication on Innotek ($0.43, unchanged): Faced with a changing disk drive industry more than 15 years ago, InnoTek – previously Magnecomp, a supplier of high-precision disk drive components – sold its core business to a big customer at a “good price”. It then focused on growing the “very small stamping business” that was left. Today, the precision components manufacturer is stable but too small to be of interest to most investors, said its chairman Neal Chandaria. “We need to scale our business, and we need to enter sectors and segments which are going fast, which get investors excited.” Among the promising new sectors it has identified are electric vehicles, and graphics processing unit (GPU) servers that are riding the artificial intelligence (AI) wave. InnoTek used to have three business divisions – automotive, office automation, and TVs and displays – supported by five facilities in China. In 2022, in the wake of the pandemic and rising geopolitical tensions, the company created an additional division that focused on new businesses. This division began manufacturing components for GPU servers, gaming machines, medical devices and ATMs. “These are future sectors,” said Chandaria. “We felt, compared to the more traditional sectors, that these will have longer growth potential, and faster growth potential.” At 43 cents, Innotek is capitalized at $100mln and trades at 0.6x its book value of 76 cents and based on our estimate of its core profit of $10mln, core PE is around 10x. However, with non-cash provisions and impairments, FY2024 net profit could come in around $6mln, putting reported net PE at 16.7x. Fortunately, its strong balance sheet with net cash of $56mln suggests that its usual dividend payment of 2 cents/share or $5mln/year payout can be sustained, translating to a net yield of 4.6%. We have an “Accumulate on Weakness” rating on Innotek, given that its short term pains would pave the way for longer term gains for the company |
