BRC Asia – FY21 profit at record high

• 4Q21 earnings of S$10.2mn was above our estimates, at 26.9%. The beat came from higher deliveries and the reversal of impairment loss from its associates. FY21 profit of $49.7mn is a record high for the group.
• Total dividend for FY21 stands at 12 cents per share, exceeding our forecast of 8 cents, reflecting management’s confidence in the construction recovery.
• Net gearing inched up to 1.17x from 1.12x as working capital needs increased due to higher inventory costs. We expect net gearing to remain elevated in FY22e-23e to support inventory in anticipation of higher expected deliveries.
• Maintain BUY with higher target price of S$1.84, from S$1.79. We revise FY22e earnings by 39% while earnings per share increased by 12.5% as we factor in the higher share float and forecast higher order deliveries in FY22. Our TP is based on 11x FY22e P/E, still at a 15% discount to the 10-year historical average, on account of the uncertain environment. Catalysts expected from higher foreign-worker inflows to Singapore.

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Marco Polo Marine (MPM SP)

FY21: Green Shoots Appearing On Tighter Utilisation; Primed For Entry

FY21 results were a strong beat due to better-than-expected fleet utilisation rates, as well as shipbuilding and repair operations. Channel checks suggest vessel utilisation has been improving, helped by minimal newbuilds. We like MPM for its lean operations following the completion of its corporate restructuring efforts, and believe the company is primed to benefit from positive operating leverage. Maintain BUY with target price slightly raised to S$0.038.

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CGS CIMB

LIM & TAN

Property Development

Green building, building green

■ Mandatory building energy codes, green-certified buildings and higher IBS adoption are key to decarbonising Malaysia’s buildings & construction space.

■ Developers may prefer green commercial/industrial buildings given higher marketability and selling price premium vs. green residential buildings.

■ SP Setia and Sime Darby Property are poised to benefit from the growing demand for green certified buildings given their experience within the space.

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Jardine Matheson Hldgs (US$54.14, down 48 cents) announced that it intends to increase the amount of its share buyback programme announced on 30th September 2021 (the ‘Programme’) by US$250 million to now target returning up to US$500 million to its shareholders by 30th June 2022. As of 8th December 2021 it has already acquired close to US$250 million of shares under the Programme.

The Company’s ordinary shares will be repurchased by the Company, in accordance with powers under the Bermuda Companies Act and the constitution of the Company. In accordance with the Company’s current practice, details of any repurchases made by the Company will be provided to the market via regulatory announcements and published on the Company’s website. The purpose of the Programme is to reduce the capital of the Company.

As the holding of treasury shares is not provided for in the Company’s constitution, any shares which the Company repurchases will be cancelled. The Programme is in line with Jardine Matheson Group’s previously announced capital allocation policy. The Group remains committed to return gearing nearer to historic levels over the medium term, following the simplification of the Group’s holding structure earlier in the year. At US$54.14, market cap of Jardine Matheson Hldgs is US$39,076mln, trailing 12-mth P/E is 78.4x, dividend yield is 3.2% and its current P/B is 0.7x.