ANALYSTS SAY: Buy, Sell, Hold (4 May)

MAYBANK KIM ENG

Singapore Banks

1Q22 results wrap

Improving operations offers entry opportunity
DBS and OCBC 1Q22 earnings were in-line with Street, while UOB was below from weak trading income. The sector is in the early phase of operational growth with rising NII supported by robust loans and improving NIMs. As rates increase and regional re-opening gathers pace, we expect momentum to accelerate – especially in to 2H22. Asset quality and tail
risks from geo-politics, inflation and uncertain macro need to be watched, but strong capital levels and provisions provide offsets. Maintain Positive.
We upgrade OCBC to BUY on unchanged TP of SGD14.04. Preferred pick DBS given low cost funding base supporting NIM upside from rising rates.

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CDL Hospitality Trusts (CDREIT SP)
Proxy To Recovery; U/G to BUY

RevPAR growth, rising rates, higher visibility
CDLHT’s 1Q22 revenue/NPI rose c.36% YoY/c.23% YoY, driven by RevPAR recovery in Singapore, Japan, Germany, Italy, UK, and the Maldives. While occupancies were softer, ADRs grew with pent-up demand, as travel was relaxed from Mar 2022. We see long-haul travel recovery determining its earnings trajectory, with risk on the upside, given better-than-expected pricing power, against rising demand. Demand visibility in Singapore has improved, with better fundamentals in 2H22. With stronger RevPAR, we raised DPUs by 5-15% and our DDM-based TP to SGD1.45 (COE: 5.9%, LTG: 2.0%) from SGD1.20. Risk-reward is favourable in our view, at 5.5% FY23E DPU yield and 25% 2-year DPU CAGR. Upgrade from HOLD to BUY, and we rate CDLHT as the best hospitality sector recovery S-REIT proxy.

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MAYBANK KIM ENG

MAYBANK KIM ENG

Frasers Hospitality Trust (FHT SP)
RevPAR Tracking In Line

Expect stronger 2H22; valuation stretched; HOLD
1H22 DPU was +>100% YoY/-13% HoH, and c.35% of our FY22 forecast. All markets saw GOR (gross operating revenue) increase YoY, and (except for Malaysia) also positive and better GOP (gross operating profit). Sector
fundamentals are improving, with reopening borders offering tailwinds to demand recovery. We raise DPUs by 5-6% on stronger RevPAR assumptions and lift our DDM-based TP (COE: 6.2%, LTG: 2.0%) to SGD0.55 from SGD0.50. FHT’s assets are well-placed, and we see stronger RevPAR in 2H22E. Its recent share price surge suggests a poor risk-reward at 3.5%
FY23 DPU yield and we stay at HOLD. We prefer ART (ART SP, SGD1.16, BUY, TP SGD1.35) for its more diversified portfolio, concentrated long-stay assets and upside from capital distributions amid uneven RevPAR recovery.

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Venture (VMS SP)
One for the late cycle play

Riding a post-Covid recovery; BUY
1Q22 PATMI of SGD84m (+28.6% YoY) beat our and consensus estimates,
accounting for c.24% of our full year forecast (1Q historically accounts for
c20-22%), driven by broad-based growth. Maintain BUY with unchanged TP
of SGD21.00 (17.2x FY22E P/E) as we see earnings recovery this year
towards pre-Covid levels (2019: SGD363m) as a catalyst, as this narrative
contrasts other tech plays globally where demand slowdown is a key
concern. 

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