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UOB KAYHIAN |
UOB KAYHIAN |
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Elite UK REIT (ELITE SP) 1Q25: Counter-Cyclical Cash Flows Unaffected By Reciprocal Tariffs
1Q25 DPU grew 9.6% yoy, boosted by dilapidation settlement and lease surrender premium totalling £1.6m, while tax expenses decreased by 13.6% yoy. Management intends to redevelop Lindsay House at Dundee, Scotland and Newport Road in Cardiff, Wales into PBSA. The impending divestment of Peel Park site would further reduce gearing and could lead to a potential special dividend. ELITE is a recession-resistant counter-cyclical yield play. Maintain BUY. Target price: £0.35.
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STRATEGY – GREATER CHINA Alpha Picks: May Conviction Calls
The HSI and MSCI China index fell 4.3% mom and 5.2% mom respectively in April, driven by Trump’s tariff announcements in early-April and fears of a potential global recession. Due to the ongoing external uncertainties, we will maintain our exposure to domestic policy beneficiaries and defensive sectors. New additions to our BUY list are Alibaba, Innovent, Shuanghuan, and Trip.com, and we take profit of CR Land and JBM Healthcare.
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LIM & TAN |
LIM & TAN |
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CSE Global’s market cap stands at $303.8mln and currently trades at 7.7x forward PE and 1.2x PB, with a dividend yield of 5.6%. Consensus target price stands at S$0.62, representing 45.9% upside from current share price. We like that revenue is up 4% yoy to $205.5mln and could have been higher if not for FX loss. We think CSE Global is largely defensive against tariff s given their producƟ on facility in US and that they will continue to win larger green field contracts in Singapore given the end of local elections. Lastly, given that share price has dropped 10% since our last DG, we now upgrade our recommendation to an “Accumulate on Weakness” rating on CSE Global.
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At FHT’s last traded price of 65 cents, market cap is $1.25bln and its trades at 1x book and only 3.15% annualized dividend yield while share price is at a signifi cant premium to Bloomberg consensus target price of 45 cents. For hospitality exposure, we prefer Far East Hospitality Trust or FEHT which is trading at a more attractive valuation of 0.6x book, more than 7% div yield, and has 20% upside to consensus target price of 66 cents versus its last traded price of 55 cents. Maintain “Accumulate” rating on FEHT. |
| MAYBANK KIM ENG | MAYBANK KIM ENG |
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CSE Global (CSE SP) Still a Top Pick despite tariffs
Maintain BUY with a slightly lower TP of SGD0.58 As CSE has production facilities in the US, the impact from the Trump tariffs should be minimal. Its acquisition of Chicago Communications for USD8.5m will be accretive to EPS and will be vital for expanding its critical communications business in the US, especially with data-centre clients. We conservatively assume the tariffs remain place and the US economy slows down. We lower our FY25/26 PATMI forecasts by 14.7% and 18.8%, and maintain BUY with a lower TP of SGD0.58, based on 11.5x FY25 P/E.
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Aztech Global (AZTECH SP) Key customer orders tank
Maintain HOLD, lowering TP to SGD0.45 from SGD0.56 1Q25 revenue of SGD42m and NPAT of SGD12.5m fell sharply by 67% and 91% YoY, respectively. We believe the tariffs will reduce US consumer demand and orders from its key customer should remain weak. Even with the ramp up of its 5 new customers, it will not be able to replace orders lost from its key customer in the short term. We cut our FY25/26 PATMI forecasts by 43.1/43%, and lower our TP to SGD0.45 from SGD0.56. We prefer Frencken (FRKN SP, BUY, TP SGD1.33) due to growth from its semicon segment.
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