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MAYBANK KIM ENG |
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Keppel Corporation No deal from Temasek
■ Temasek has invoked the MAC pre-condition and will not proceed with its partial offer for KEP. The SIC has confirmed and has no objection to this. ■ We expect KEP’s share price to further correct in the near term to the previous trough of 0.82x P/BV or c.S$4.88. ■ Our SOP TP remains at S$6.46. 2H earnings recovery and stronger gains from asset recycling are catalysts. Add after share price shock subsides.
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OCBC Bank (OCBC SP) Not yet shipshape
NPL uncertainty despite North Asia bright spot OCBC’s 1H20 PAT disappointed Street/MKE on larger than expected provisioning charges. The group has had a number of negative surprises on its O&M exposure in the past and it manifested in the current quarter too. Additionally, around 10% of their loan book is under moratoriums, which may begin to see pressure as these expire in 2H20. NPL risks spilling over to 2021-22 cannot be discounted. Separately, operational normalisation may be muted for the group’s ASEAN businesses given the various stages of lockdowns, while North Asia may be a bright spot. Dividend caps may keep yields depressed and uncertain in the near term. Maintain HOLD.
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MAYBANK KIM ENG |
RHB |
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Venture (VMS SP) Resilient, but priced in
1H20 in line; fairly valued; maintain HOLD 1H20 PATMI was in line with our and street estimates, falling 28.2% YoY to SGD130.5m, due to disruptions caused by Covid-19. We trim FY20-22E EPS by 3-7% to adjust for a slightly softer recovery profile. That said, our ROE-g/COE-g TP rises to SGD18.46 as we roll forward valuation to 2x FY21E P/B (previous 1.6x FY20E). Maintain HOLD as the recovery looks priced in. We prefer Frencken (FRKN SP, BUY, TP SGD1.20) given i) more attractive valuation; and ii) potential for positive earnings surprise.
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CapitaLand (CAPL SP) Resilience From Well-Diversified Portfolio; BUY
BUY, with new SGD3.75 TP from SGD 4.00, 37% upside. 1H PATMI was in line with CapitaLand’s earlier market guidance. The retail and lodging segments remain badly hit by COVID-19, but the impact was cushioned by stable recurring income from its fund management and industrial portfolios. CAPL now trades at a 10-year low (-2SD) P/BV of -0.58x (Figure 2), which we believe underestimates its well-diversified portfolio’s strengths.
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Check out our compilation of Target Prices
