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19-Mar-2020 - Selling pressure drove prices of banking stocks below Global Financial Crisis (GFC) low Price-to-Book (P/B) ratios. - Even under stressed scenario, banks can meet their dividend payout. Last dividend cut was during the 2008 GFC when Tier-1 capital ratio was 12.0% vs 15.3% currently (before CET-1 was introduced). - Bank stocks now trading at above 6.5% dividend yield. - Maintain Singapore Banking Sector at Overweight. Recent price weakness presents an opportune time for investors to enter with an attractive yield. Singapore Tay Wee Kuang
16-Mar-2020 • With the market in a tailspin, we will periodically screen companies that enjoy some of the strongest balance sheets in comparison to their market cap. • Our screening criteria for the Top 20 net cash to market capitalisation companies are: i) company has to be above S$100mn in market capitalization ii) excludes financial companies (a large part of their cash holdings are customer deposits). • Some of the stocks generated in our screen are under our coverage – Penguin International and PropNex. We have a BUY recommendation on both companies. • The screen not only shows the healthy balance-sheet of the company, but it can also reflect how cheap the valuations of the company especially when we strip out the cash. Singapore Paul Chew
13-Mar-2020 - The FTSE S-REIT Index fell 109pts MoM to 853pts, erasing gains accumulated since May19. Correspondingly, the dividend yield and yield spread expanded 19bps (+15.3%) and 63bps (+25.7%) MoM to 4.73% and 3.06%. - Total returns for hospitality (-19.3% MoM) and retail (-7.7% MoM) sectors most impacted by Covid-19 as funds fled to more the more resilient industrial sector (-3.6%). - Sector yield spread at finally in positive territory at 0.6 standard deviation (s.d.) after being in the -1.0 to -2.0 s.d. range throughout 2019. - Following the emergency Fed rate cut of 50bps to 1.25% on 3 March 2020, the SOR fell to 0.82% on 6 March. The 80bps fall in the 10YSGS was more pronounced, ending at 1.22% while the 10YSGS fell 47bps to 1.2%, surpassing the lows seen in 2012. - Remain NEUTRAL on S-REITs sector. Sub-sector preferences: Office and Industrial. Singapore Natalie Ong
13-Mar-2020 • STI fell 16.8% in the 72 days since the first case of Covid-19 in China, more pronounced comapred to the 15.5% fall in the STI over the 115 day SARS period • Most sever sell-offs in history were the 62% fall in the STI during the Global and Asian Financial Crisis, lasting 515 days and 564 days respectively • Silverlinings include record low interest rates and valuations, government stimulus globally and the dramatic reduction and containment of new Covid-19 cases in China Singapore Paul Chew
10-Mar-2020 • FY19 revenue and earnings were below expectation. FY19 revenue more than tripled to S$21mn. CBH turned EBITDA* positive in 2H19. • The ramp-up from IGM and Philippines post-acquisition and post-renovation respectively was slower than we expected. IGM accounts for 48% of group sales. • CBH has built an impressive regional footprint of healthcare services across the region including Singapore, Indonesia, Philippines, Malaysia and Hong Kong. The lab test and renal care services in Indonesia are the largest contributor to revenues. • Maintain BUY with an unchanged target price of S$0.26. Growth in FY20e will be underpinned by acquisition IGM and Dental Focus and recovery in the Philippines. While still loss-making, we expect the company to clock another year of positive EBITDA in FY20e. Singapore Phillip Research Team
09-Mar-2020 • FY19 NPI and DPU came in within our forecasts despite weaker RMB in FY19. • Income growth expected from the contribution of Shunde and Tianbei malls in 1Q20, AEI on 13% of space at Ocean Metro Malls clocking in 42.9% of rental reversions and built-in rental reversions averaging 9% p.a. on 80% of the leases. • Maintain ACCUMULATE with an unchanged TP of S$0.88. Singapore Natalie Ong
09-Mar-2020 • Federal Reserve cut benchmark rates by 50 bps to 1.00% – 1.25% range in response to the macroeconomic uncertainty brought about by the Covid-19 outbreak. NIM may face further compression pressures in upcoming quarters. • Domestic loans continue slowing (+2.97% YoY) in January, and FY20 loans performance will continue to depend on growth in business loans. • Short term spike in volatility with escalating threat from Covid-19 will see derivative volumes benefit. • Maintain Singapore Banking Sector at Overweight. All 3 local banks turned in a set of strong results for 4Q19. The challenging macroeconomic conditions will weigh in on future earnings, but sector remains attractive on dividend guidance. Singapore Tay Wee Kuang
05-Mar-2020 • 4Q19 and FY19 NPI and DPU were in line with our forecast • High income visibility due to portfolio occupancy of 99.9% and WALE of 4.1 years • FY19 DPU down 2.1% YoY; accretion from Fuzhou E-commerce wiped out due to FX and timing lag between drawdown of loans and acquisition • Maintain BUY with a lower TP of S$0.83 (prev. S$0.84). Our TP translates to a FY20e DPU yield of 8.7% Singapore Natalie Ong
03-Mar-2020 • 4Q19 revenue up 20%, lifted by all segments but FY19 revenue down 19% due to timing recognition of overseas and EC projects upon handover, recognised in FY18. • Take-up rate of 37% for total units in new launches in SG, up 40% YoY. • Maintain BUY with higher TP of S$11.89. Our RNAV-derived target price represents 0.98x FY20e P/NAV. Singapore Natalie Ong
27-Feb-2020 - 4Q19 earnings and revenue exceeded our expectations. PATMI beat our estimates by 11% due to lower operating expenses and taxes. - Balance sheet and commentary from management reinforce the upbeat outlook for FY20e. - Net cash at a record level of S$59.8mn (+43% YoY). Dividends raised by 40% to 1.75 cents. - The outlook remains positive. Penguin is diversifying its customer base into new geographies and new products. Our target price is lowered to S$0.88 from S$0.93 (5x PE excluding net cash). We reduced our FY20e earnings forecast by 12% as we lowered our charter income estimates. Our BUY recommendation is maintained. Singapore Paul Chew
26-Feb-2020 - 4Q19 revenue met our estimates. Net profit was below due to higher than expected provision for doubtful debts and effective tax. Net earnings rebounded 32% YoY. - New homes sales the largest driver to revenue. The sluggish resale market is undergoing a recovery as the gap in buyer expectation narrows. - Maintained a market share of around 33% for all residential property transactions (resale, new, leasing and HDB). - We maintain our ACCUMULATE recommendation. Our target price is maintained at S$0.55. The outlook is positive as property transactions are beginning to recover. New launches with attractive pricing enjoy good take-up rates. HDB resale market will be spurred by the enhanced grant and more units meeting their MOP. Resale market recovery is less clear and dependent on sentiment. But the widening price gap between new and older units will reach an inflexion point for buyers. Singapore Paul Chew
26-Feb-2020 - 4Q revenue grew 6.7% YoY, in line with estimates. Full year contribution from both Healthcare Services and Hospital Services divisions grew at healthy levels of 8.8% YoY and 5.0% YoY respectively. - FY19 EBITDA grew a modest 2.8% YoY despite drag from gestation costs related to opening of RafflesHospital Chongqing. - Covid-19 outbreak may cause delay to the opening of RafflesHospital Shanghai, possibly extending gestation period. - Despite investment in China, RFMD maintains a strong net cash position of $150.7mn - We maintain our NEUTRAL recommendation with a revised TP of S$0.99. Near-term drag on business is likely but recovery expected to be swift on intact long-term positive outlook. Singapore Tay Wee Kuang
24-Feb-2020 - 4Q19 revenue and earnings exceeded expectations. Net profit grew 34% YoY and QoQ improvement of 6% despite seasonally slower 4Q compared to 3Q - NII grew 6% YoY on 7bps NIM expansion and modest loans growth of 3%. NIM held steady at 1.77% QoQ on lower funding costs despite pressure on asset yield. - Non-interest income grew 58% YoY, with quadrupling of other NII from trading income, and double-digit growths experienced across fee income (+17% YoY) and insurance income (+25% YoY). - Final dividend of $0.28 to bring FY19 distribution to $0.53 per share compared to $0.43 in FY18 (+23% YoY). This translates to a c.4.8% dividend yield based on current prices. - We maintain ACCUMULATE at a higher target price of S$12.10 (previously S$11.70). We roll forward our Gordon Growth Model to FY20e without changes to estimations. Singapore Tay Wee Kuang
24-Feb-2020 - 4Q19 revenue and PATMI were in line with estimates. -Net profit grew 10% YoY on stellar trading income almost quadrupling to $224mn from $59mn in 4Q18 while NII and fee income growing a modest 2% apiece YoY. - 4Q NIM fell 4bps YoY to 1.76% despite stable asset yield and funding costs a result of increased interest-bearing liabilities from growth of customer deposits YoY (+3% YoY). - Proposed final dividend of 75 cents; consisting of 55 cents core dividend and 20 cents of special dividend, bringing dividend for FY19 to $1.30 per share (+8% YoY). This brings dividend yield to c.5.0% based on current price. - Maintain ACCUMULATE with an unchanged target price of S$27.80. We hold FY20e stable after factoring headwinds in previous quarters. Singapore Tay Wee Kuang
24-Feb-2020 - Revenue and EBITDA beat our expectations. Mobile revenues were higher than forecast. Earnings would have been stronger if we included one-off cost from the provision of cable maintenance and accelerated depreciation. - Mobile competition turning more rational and ARPU even rebounded in 4Q19. Cybersecurity business surged 37% YoY but still loss-making. - Starhub continues to make headway in their cost control efforts: 4Q19 staff cost ( -1.6% YoY), operating leases (-44% YoY) and other Opex (-44% YoY). - Dividends per share maintained at 9 cents in FY19. Guidance for FY20e is to maintain the 9 cents full-year dividend, to be paid on a semi-annual basis. The dividend yield is 5.9%. - Margin guidance by management was surprisingly more conservative than our forecast (Figure 1). We lowered our EBITDA for FY20e by 3%. However, our free cash-flow estimate was raised by S$100mn due to a cut in the capex guidance. We maintain our ACCUMULATE recommendation. Our TP is raised to S$1.70 (previously S$1.58) as we roll-over to FY20e earnings and peg Starhub’s valuations to 6.5x industry EV/EBITDA. Singapore Paul Chew
24-Feb-2020 - 4Q19 revenue met our estimates but PATMI missed due to higher operating expenses and taxes. - Excluding IFRS(I) 16 accounting change, FY19 and 4Q19 PATMI grew by 9.3% and 8.4% YoY respectively. - Multiple growth drivers intact for Sheng Siong in FY20e including store expansion, operating leverage, rebound in revenue per sqft and recovery in consumer sentiment. - The supply chain impact from the Covid-19 appears manageable. Likely to see a healthy 1Q20e results following the spike in demand plus overall improving consumer sentiment. Our ACCUMULATE recommendation is maintained and target price raised to S$1.41 (previously S$1.32). We rolled-over our target price to FY20e earnings and 25x PE. Our FY20e earnings is lowered by 5% as we raise operating expense estimates. Singapore Paul Chew
19-Feb-2020 • Singapore GDP forecast for 2020 downgraded by MTI to -0.5% to +1.5% (previously +0.5% to +2.5%). Baseline growth rate for 2020 is 0.5% (2019: +0.7%) • Overall 2020 fiscal deficit of S$10.9bn (2.1% of GDP). This compares with the 2019 S$1.6bn deficit (0.3% of GDP). Net Investment Returns is expected to be the largest contributor to government coffers in 2020 at S$18.6bn. • Planned 2% point increase in GST to be deferred to 2022 to 2025. • Major stimulus includes wage relief, payouts to households and income tax rebate. The government added it is prepared to offer more if the situation worsens. • There is no change to our recommendations or forecast. The budget provides some near-term cost relief but it does not change the demand dynamics. A beneficiary of the budget will be supermarket operator Sheng Siong through the wage relief and cash disbursements to households. Singapore Paul Chew
19-Feb-2020 - Revenue and PATMI were within expectations, excluding S$27.3mn impairment on the taxi business. Excluding provisiions PATMI would have declined an estimated 5%. - Public transport services was surprisingly the worst hit segment with 25% YoY drop in 4Q19 operating profit. We believe a lumpy license fee could have been the trigger. - Headline results was weak due to provision in taxi business and likely license fee expenses. We maintain ACCUMULATE but with a lower target price of S$2.20 (prev: $2.56). Our PATMI for FY20e is lowered by 16% to account for weaker traffic, rental rebates and disruption in China operations. Singapore Paul Chew
17-Feb-2020 - 3QFY20 revenue was better than expected. Earnings missed due to weaker margins. EBIT margins impacted by cargo weakness, increased IT expenses and higher contribution of newly consolidated Country Foods. - Associate earnings fell due to start-up losses at new Daxing operations and exclusion of prior year gain on of sale of S$5.8mn from DFASS to KrisShop. - The outlook is uncertain with the outbreak of COVID-19 virus. SATS revenue will suffer from the dip in aviation traffic and closure of restaurants in China. Our FY20e PATMI is cut by 23%. As a gauge of the impact, the Singapore Tourism Board mentioned a possible 25-30% fall in visitor arrivals in 2020 due to the outbreak. - Downgrade to NEUTRAL from ACCUMULATE with a lower target price of $4.45 (prev. S$5.36). Excluding the acquisition, core revenues were flat. We think SATS will require some time to recover from the depressed volumes triggered by COVID-19 virus and to grow the organic earnings of their recent acquisitions. Singapore Paul Chew
17-Feb-2020 - Revenue and earnings disappointed. Competitive intensity in mobile for Australia and Indonesia is worse than expected. - The turnaround in India is underway and Singapore operations stable. - Revenue and EBITDA guidance lowered from stable to declining mid-single digit and low teens respectively. It is the 2nd consecutive quarter of weaker guidance. - Downgrade to NEUTRAL with a lower TP of S$3.18 (prev. S$3.31). Despite the promising turnaround in India, we believe with the operational weakness in Australia will keep group earnings depressed in the near-term. We expect dividends to be maintained, supported by higher dividends from associates. Yield is now 5.4%. Singapore Paul Chew
17-Feb-2020 - Revenue was within our estimates but earnings beat forecast. Beer operations disappointed but spirits division performed well. - Spirits division net profit jumped 25% YoY in 1Q20 on higher volumes and better margins. Spirits account for 84% of group PATMI. Volumes touched a record 89mn litres. - Beer sales volumes was a disappointment. Sabeco volumes dropped 6% in 1Q20 due to certain publicity regarding its ownership. - We are upgrading our recommendation to BUY. The spirits business sales volume and margins are better than expected. Sabeco beer business should recover in the following quarters. We raised our SOTP-derived TP to S$0.95 (previously S$0.80). Our FY20e earnings is raised by 6%. We increased our margin assumption and modelled profitability for the NAB business. Singapore Paul Chew
14-Feb-2020 • Revenue and EBITDA were marginally below our expectations. Project-related installation and diversion revenue was lighter than expected. • Growth in residential revenue has peaked. The migration of Starhub customers from cable to fibre has been ended. Net addition of residential fibre in 2Q20 was the slowest since listing. • NBAP is an exciting opportunity as 5G rolls out in Singapore, but any material contribution will be several years ahead. • There is no change to the attractive utility type revenues of NetLink. Nevertheless, we are downgrading to NEUTRAL from ACCUMULATE due to the recent share price run-up. Our target price is unchanged at S$0.99. Growth will be more sanguine as the migration from cable to fibre has completed. Singapore Paul Chew
14-Feb-2020 • 4Q19 results dipped modestly below our expectations. Net property income remained stable YoY. 4Q19 DPU was 4.9% lower YoY due to weaker EUR/SGD exchange rates, bringing FY19 DPU down by 2.8%. • NAV per unit jumped 13% from S$0.75 to S$0.85 due to revaluation gains. • We like the high-income stability observed in IREIT’s portfolio. It remains largely anchored by the attributes of its German assets (occupancy: 99.7%, WALE: 4.2%), with an overall portfolio occupancy rate of 94.6% and a WALE of 4.2 years. • Maintain ACCUMULATE with an unchanged target price of S$0.885. Singapore Tan Jie Hui
12-Feb-2020 - 4Q19 revenue and EBITDA were around 5% better than our expectations. Revenue and EBITDA fell 6% and 3% respectively in 4Q19. DPU guidance of 1.2 cents for FY20e is maintained. - Some signs of stability in operations - cable TV ARPU flat QoQ after 13 quarters of decline and broadband revenue modest rise QoQ - We were surprised by the stability in certain operational data. Cable TV ARPU finally stopped sliding albeit subscribers are still contracting. Broadband subscribers responded well to the lower prices offered, which helped to keep revenues stable. - APTT has guided that data backhaul services offered to Taiwanese mobile operators will materialise when 5G services are rolled out. At present, there are limited data points for us to model this market opportunity. Our target price will peg APTT at around 10x EV/EBITDA. This is a 10% discount to their much larger Taiwanese peer valuations. We maintain NEUTRAL and keep our target price unchanged at S$0.165. Singapore Paul Chew
12-Feb-2020 - 2Q20 revenue and PATMI were within our expectations. Interim dividends increased by 25% to 5 cents per share. MMH pays an attractive yield of 6%. - Recovery is underway with the first revenue and earnings growth after 5 quarters of decline. FY18’s record revenue was a challenging comparable. - We have not changed our FY20e earnings forecast. It still implies a 40% YoY jump in 2H20e earnings. The recent closure of the Suzhou plant will be disruptive as China represents 30% of sales. We expect some customers to shift some of their orders to MMH other SE Asian plant. But this event has raised downside risk to our forecast as global growth slows. Our REDUCE recommendation and target price of S$1.60 is unchanged. We benchmark our valuations to 15x PE, semiconductor back-end peer valuations. Singapore Paul Chew
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