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RHB |
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ST Engineering (STE SP) Expect To Continue Outperforming STI; Keep BUY
Reiterate BUY, new SGD4.15 TP from SGD4.65, 28% upside and c.5% 2020F yield. While 2020F profit is expected to decline amidst weak profits for Aerospace and potential delays in order delivery for other business segments, earnings should improve in 2021 as the global aviation industry starts to gradually recover. We maintain that ST Engineering will continue to outperform the STI, as its well-diversified business portfolio and a record-high orderbook will enable it to better withstand current economic weakness vs other large-cap stocks in Singapore.
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Silverlake Axis (SILV SP) Spending Cuts Likely To Impact Outlook; NEUTRAL
NEUTRAL, new DCF-based TP of SGD0.26 from SGD0.41, 8% upside with c.3% FY20F (Jun) yield. With the COVID-19 pandemic and plunging oil prices impacting economies, banks’ default rates are likely to increase – thereby dampening their profitability. This, together with lower interest rates, leads us to expect banks to cut IT capex spending. As such, we pare down Silverlake Axis’ FY20-21F earnings by 14% for each year.
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RHB |
CGS CIMB |
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Raffles Medical (RFMD SP) Not a Vaccine To The Pandemic
Maintain NEUTRAL with a new SGD0.93 TP from SGD0.96, 7% upside and 3% yield. 1Q20 net profit was down 45% YoY to SGD7.5m. We believe Singapore’s recent COVID-19 escalation will continue to hit Raffles Medical’s 2Q20 operations, as both medical tourism and local patient numbers decline amid border closures and the circuit breaker measures. For its China operations, clinics previously instructed to close have reopened, but we now expect a longer turnaround period for the group’s hospital in Chongqing.
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REIT Hospitality: No near-term catalysts
■ Industry RevPAR plunged by 41% in Feb and we expect Mar to be worse. ■ Cut REITs’ FY20 DPU by 24-40%, factoring in -20 to 50% RevPAR/RevPAU. ■ CDLHT may see the strongest rebound post Covid-19.
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