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RHB |
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Sheng Siong (SSG SP) Impact From Malaysia’s Movement Control Order
Maintain BUY and TP SGD1.42, 38% upside plus 4% yield. Share price has fallen 28% from its peak. We note that over the shorter term, there are still some downside risks as share price could continue to trend down along with the sell-down in the market. But in the longer term, Sheng Siong’s fundamentals are still intact as food staples demand remains fairly resilient. Barring any prolonged lockdown in regional countries, we do not foresee any major impact on earnings.
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Oversea-Chinese Banking Corp (OCBC SP) NIM To Narrow From FFR Cut
Stay NEUTRAL with a new GGM-derived SGD9.60 TP from SGD11.20, 10% upside with c.6% yield, based on 0.89x 2020F P/NBV. We lowered our sustainable ROE assumption to 10% from 10.7%, as we cut FY20F earnings on lower NIM and higher provision assumptions. The 15 Mar cut in the federal fund rate (FFR) will subsequently exert downside on the SIBOR. Travel restrictions globally – including the one announced by Malaysia yesterday following the recent pandemic declaration by the World Health Organisation – could raise provisioning requirements.
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| MAYBANK KIM ENG | CGS CIMB |
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Singapore REITs Finding The Floors
Sector has retreated from earlier re-rating S-REITs have retreated 24% since Feb as the market has fallen to a tenyear low, but DPUs could see a lift from the surprise US 100bp Fed rate cut. Sector valuations are meanwhile elevated relative to historical div. yields and P/NAVs following their strong yield compression, accretive acquisitions and index inclusion. Current share prices imply most largecap S-REITs are 11-31% below their +1-std div. yields and 41-75% above their trough P/NAVs. We remain selective given the challenging macro outlook, and continue to prefer industrial REITs, as they maintain growth during the current recessionary cycle from their longer WALEs, backed by rising overseas assets. Valuations for CMT (CT SP, BUY, TP SGD2.70) are compelling against its historical div yield and P/NAV, while SPHREIT (SPHREIT SP, BUY, TP SGD1.15) and CACHE (CACHE SP, BUY, TP SGD0.80) stand out with current valuations exceeding their troughs.
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Genting Singapore Chipped by Covid-19
■ GENS issued a profit guidance for 1Q20 and 1H20 financial results to be adversely affected by Covid-19, but the extent was unquantifiable. ■ Cost control measures have kicked in, including a 9-18% base salary cut for managerial staff and executive directors, as well as unpaid leave. ■ FY20-21F EBITDA is lowered to S$652.2m and S$918m, respectively. Our SOP-based TP is now S$0.76, now based on 7x CY21F EV/EBITDA.
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Check out our compilation of Target Prices
