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PHILLIP SECURITIES |
UOB KAYHIAN |
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Phillip Singapore Strategy Playing with a two-legged tail risk
• How do you play a loaded game? A game where an individual can change the rules and outcomes daily with a tweet? You either don't play or raise your odds. We think the odds favour the investors in selected sectors, especially banks with a record forward dividend yield of 7%.
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Banking – Singapore Flexible Adaption In Response To Disapproval From Treasury Markets
The Trump Administration made two consecutive concessions: a) a 90-day pause for countries with reciprocal tariffs above the baseline rate of 10%, and b) exemption for electronics products imported from China. Trump has shown himself to be pragmatic enough to accommodate the concerns of businesses and consumers. Upgrade to MARKET WEIGHT. HOLD DBS (Target: S$40.00). Upgrade OCBC to BUY (Target: S$16.90). DBS and OCBC provide attractive 2025 yields of 7.9% and 6.7% respectively.
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UOB KAYHIAN |
UOB KAYHIAN |
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Centurion Corp (CENT SP) A Safe Harbour Amid Trump’s Tragic Tariffs
CENT remains a key stock for investors in turbulent times, in our view. It has earnings growth, backed by a strong outlook for the Singapore construction sector and underpinned by policy changes to lower the density within PBWA assets. In addition, both its PBWA and PBSA assets exhibit high inelastic demand and thus appear inexpensive, trading at 2025F PE of 9.5x and generating a net margin of >38%. Maintain BUY. Raise target price to S$1.48.
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Technology - Handsets Higher iPhone prices could dampen demand
■ The US’s recent reciprocal tariffs will significantly disrupt the smartphone supply chain, raise iPhone prices and weaken consumer power, in our view. ■ The losers are Apple and its suppliers on reduced iPhone shipments and profitability; winners are Xiaomi and Chinese OEM suppliers, in our view. ■ Reiterate Overweight on China’s smartphone sector as we like Xiaomi for its global market share gains and are positive on Chinese OEM suppliers.
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| MAYBANK KIM ENG | MAYBANK KIM ENG |
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Aztech Global (AZTECH SP) Tariffs!
Downgrade to HOLD with a lower TP of SGD.63 With President Trump bumping up China’s tariff to 145%, Aztech will likely be impacted through its sizable manufacturing footprint in both China and Malaysia. About 79% of its revenues are from North America, which is its single-largest customer. We believe the tariffs will hurt both its margins and demand, resulting in delays to new product launches and lower demand from its key customer. As a result, we cut our FY25/26E PATMI estimates by 23.2% and downgrade to HOLD from BUY. Our TP is adjusted down to SGD0.63, pegged to 8x FY25E P/E.
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Malaysia Technology MY Semicon: U-turns and uncertainty
More exemptions in latest US tariff policy salvo The Trump administration’s trade policy yo-yo took its latest turn on 11 April as it announced further semiconductor and E&E-related reciprocal tariff (RT) exemptions. Although we’re positive on the latest policy change, we remain NEUTRAL on the sector owing to possible sustained uncertainty surrounding US trade policy and its impact on integrated global semicon supply chain. Frontken (BUY, TP MYR5.30) remains our top sector pick for its secular exposure to front-end industry growth amidst the AI revolution. We expect short-term positive share price reaction for Inari, as the new exemptions allay demand destruction risks for Apple. Trump is set to announce yet another update on semicon tariffs on 14 April.
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