ANALYSTS SAY: Buy, Sell, Hold (27 May)

MAYBANK KIM ENG

BRC Asia (BRC SP)
1HFY22: Above expectations, Robust Earnings As Construction Resumes.

BRC reported strong 1H22 earnings of S$39.8m (+108% yoy, +43% hoh) as 2QFY22 net profit surged to S$26.5m (+178% yoy, +99% qoq). The strong outperformance was led by increased delivery volumes and higher steel prices. Labour supply recovery is underway and management noted that delivery volumes will revert to pre-pandemic levels by 1QFY23. BRC currently trades at 4.8x FY22F PE, attractive in our view.
Maintain BUY with a slightly higher target price of S$2.15 (S$2.02 previously).

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Valuetronics (VALUE SP)
Valuation may be bottoming

2HFY22 beat on strong cost control; U/G to Neutral
2HFY22 PATMI of HKD56.9m (-40.5% YoY) beat our and consensus’ estimates on lower-than-expected SG&A costs. Our FY23E PATMI is largely unchanged as higher revenue expectation is offset by softer margin expectations. U/G to HOLD from SELL with unchanged TP of SGD0.50 (10.6x FY23E P/E) as we see risk reward turning neutral. Catalyst for rerating would be from evidence of i) easing of supply side issues, coupled with ii) still strong demand outlook.

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UOB KAYHIAN

UOB KAYHIAN

Genting Malaysia (GENM MK)
1Q22: Plenty Of Excitement In 2H22

1Q22 results are largely in line. GENM continues to chart commendable earnings recovery in all its key gaming jurisdictions. We expect sequentially stronger earnings from 2Q22 onwards with the reopening of borders in the region, capacity reinstatement amid removal of pandemic-related constraints, and pent-up domestic demand. Other rerating catalysts include lush dividend yields and securing a New York downstate gaming concession. Maintain BUY and target price of RM4.00.

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Malayan Banking (MAY MK)
1Q22: Recovery Prospects Priced In; Downgrade To HOLD

Maybank’s 1Q22 net profit was in line, underpinned by improving credit cost trend
but partly offset by weaker fee income. Given the commendable share price performance (outperformed the KLCI by 9% ytd), we take the opportunity to downgrade our recommendation to HOLD on valuation grounds. The stock is trading at -0.5SD to historical five-year mean P/B which we deem to be fair. Target price
remains unchanged at RM9.45 (1.17x 2022/23F P/B, 9.8% ROE)

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Aurelius Technologies (ATECH MK)
1HFY23 may be hurt by supply
chain disruptions

Reduce FY23 forecasts; Maintain BUY
We maintain our BUY call but reduce our TP by 5% to RM2.03 for ATECH (from MYR2.13 previously), as we cut our FY23E earnings forecasts (-16%), to reflect the company’s production disruptions caused by material
shortages and supply chain challenges in the wake of continuing China lockdowns. Our TP is derived based on ATECH’s CY23’s EPS of 13.7sen, pegging to a PER of 14.8x (vs. 13.8sen CY23 EPS and PER of 15.4x previously). Our new PER is derived base on the EMS peers’ hist. 5-Yrs WA PE (Fig.2).

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7-Eleven Malaysia Holdings (SEM MK)
1Q22 earnings surprised

Maintain BUY with a higher TP of MYR2.05
SEM’s 1Q22 results were above expectations on lower-than-expected selling, distribution and administrative expenses. Going forward, postpandemic recovery in consumer mobility and extension of business hours will drive earnings momentum in sequential quarters. Hence, we lift FY22-FY24 earnings estimates by 14%-24% to derive a higher TP of MYR2.05 (28x FY22 PER, about -1SD to mean). Maintain BUY. 

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