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CGS INTERNATIONAL |
CGS INTERNATIONAL |
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OCBC Non-II growth to normalise in 1Q26F
■ We expect OCBC to report 1Q26F net profit of S$1.80bn (-4.5% yoy, +3.0% qoq) on declining NIM and higher credit costs yoy and qoq. ■ Non-II likely saw slower 7.3% yoy and 6.4% qoq growth in 1Q26F as we expect lower mark-to-market gains for its insurance business. ■ Downgrade to Hold; lower GGM-based TP of S$23.30 as we trim FY26F/ FY27F EPS by 0.9%/1.1% to reflect lower NIMs and higher credit costs.
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CapitaLand Integrated Commercial Revving growth engines
■ CICT to sell Asia Square Tower 2 for S$2.48bn and buy Paragon for S$3.9bn. ■ CICT estimates proforma DPU uplift of 2.1% post transactions, proforma gearing still at a healthy 39.2%. ■ Maintain Add rating with an unchanged DDM-based TP of S$2.74.
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CGS INTERNATIONAL |
MAYBANK SECURITIES |
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ISOTeam Ltd Drones delayed, but margin recovery intact
■ S$30m in order wins announced; YTD wins of S$100m, 80% of our FY26F. ■ Drone roll-out delayed, but margin recovery continues due to savings on workers’ accommodation and post-Covid contract secured at higher margins. ■ NPM to expand by 50bp for the first 200 beds (FY6/27F) relocated to 68 Loyang Way, and a further 45bp for the subsequent 200 beds (FY6/28F). ■ We reiterate Add for its recurring business model and profit/margin recovery.
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CapitaLand Int. Comm. Trust (CICT SP) Continued reconstitution Accretive portfolio recycling:
Maintain BUY CICT on 20 April said it acquired Paragon, a premier freehold integrated development in Orchard Road, for SGD3.9b. This will be funded by divestment of Asia Square Tower 2 for SGD 2.5b, new equity of SGD600m and debt. The recycling will result in 2.1% pro-forma dividend accretion and keep its leverage below 40%. Maintain BUY with an unchanged DDMbased TP of SGD2.60.
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| LIM & TAN | LIM & TAN |
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Keppel Ltd.’s ($11.86, down 0.05) Connectivity Division and Shell Singapore Pte. Ltd. (Shell) will be test bedding an advanced immersion cooling solution at one of Keppel’s operational data centre facilities to explore the feasibility of deploying such high efficiency systems in Keppel’s future data centres to support the growing demands of artificial intelligence (AI) and high-performance computing. At $11.86, it is capitalized at $21bln and trades at 20x forward PE, 3% dividend yield (excluding any special payouts from asset monetisations) and consensus $13.38 1-year target price implies potential upside of 13%. We maintain an “Accumulate” rating on Keppel Ltd.
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CapitaLand Integrated Commercial Trust / CICT ($2.39, trading halt) has entered into a sale and purchase agreement to acquire a 100% interest in Paragon, a premier freehold integrated development along Orchard Road, comprising retail, office and medical suites, for an agreed property value of S$3,900.0 million from Cuscaden Peak. The proposed acquisition is expected to enhance CICT’s high-quality and diversified portfolio of retail, office and integrated assets, while further reinforcing its market leadership as the largest owner of private commercial real estate in Singapore. The proposed acquisition is expected to be DPU accretive by 2.1%. CICT’s market cap stands at S$18.2bln and currently trades at 20x forward PE and 1.1x PB, with a dividend yield of 3.4%. Consensus target price stands at S$2.67 and represents 11.7% upside from current share price. We like the transaction as CICT is exiting AST2 at an exit yield of 3% while investing into a freehold mixed used development project at a better yield of 3.9%. Overall there will be DPU accretion while post deal completion, the gearing of 39% is still comfortably below the 50% regulatory threshold. We advise investors to “Accumulate” CICT on some price weakness as their fund raising process gets underway. |
