ANALYSTS SAY: Buy, Sell, Hold (26 Oct)

UOB KAYHIAN

CapitaLand Integrated Commercial Trust (CICT SP)
3Q22: Disciplined And Patient Approach To Acquisitions

Downtown malls swung to positive rental reversion of 3.8% in 3Q22. Occupancy for CICT’s Singapore office portfolio improved 3.1ppt qoq to 96.0%. Management will adopt a disciplined and patient approach towards acquisitions, cognisant of difficulties in raising funds through the equity market. CICT provides an attractive 2023 distribution yield of 6.7%. Upgrade to BUY. Target price: S$2.14.

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Keppel REIT (KREIT SP)
9M22: Capital Distribution Mitigates Higher Cost Of Debts

KREIT achieved a strong positive rental reversion of 9.2% in Singapore for 3Q22. Portfolio committed occupancy also improved 1.3ppt qoq to 96.8%. Cost of debts rose from 1.9% in 1H22 to about 2.5% in 3Q22. Management has set aside S$100m from accumulated capital gains to be distributed over the next five years. KREIT provides 2023 distribution yield of 6.5% (CICT: 6.4% and Suntec: 6.4%). P/NAV is attractive at 0.65x. Maintain BUY with a target price of S$1.24. 

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CGS CIMB

Semiconductor
Focus will be on FY23-24F outlook

■ We think GVT could fare the worst (largest net profit decline) in the upcoming 3Q22F business update season.
■ We provide our 3Q22F revenue/net profit expectations for AEM, Frencken, GVT and UMS in this note.
■ There are no recommendation nor TP changes to the highlighted stocks in this note. Maintain sector Overweight.

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Globetronics Technology (GTB MK)
9M22: Marginally Below Expectations; New Pipelines To Anchor Growth In 2023

We expect a flat 4Q22 performance amid the ongoing inventory adjustment in its sensor segment. Cut earnings by 5-10% to account for softer sales and a higher tax rate assumption. The company is rationalising its lower-margin business and pursuing new programmes with its existing and new customers. Further growth could come from new sensor development with MNC customers. Risk-reward is appealing after a sharp selldown. Maintain BUY. Target price lowered to RM1.50. 

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KPJ Healthcare (KPJ MK)
Making the necessary changes to turn around

Maintain BUY
We came from a recent meeting with KPJ’s management, diving deeper into the structural changes around its operating model. Over the past 2 years, the previous GMDs have put in plenty of operational changes around the group’s procurement practice. Long-term strategy to improve efficiency and asset restructuring are also underway, despite recent key management changes. In our view, the market is discounting the potential long-term margin accretion and growth coming from returning patient volumes. Maintain BUY with an unchanged SOTP-TP of MYR1.01. 

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Kiatnakin Phatra Bank (KKP TB)
Attractive valuation; promising outlook

Strong top-line growth offsets rising credit costs
We expect healthy revenue increases from interest income and loanrelated fees to offset rising credit costs on robust loan book growth in recent years. KKP offers a higher risk-adjusted return than TISCO (CP THB95.5, BUY, THB110), in our view, given its strong revenue and earnings growth and attractive valuation. BUY and raise our TP to one of the street’s highest at THB95 (1.4x FY22E P/BV, 13.5% ROE) after lifting earnings to reflect solid 3Q22 results. Key risk is weaker than expected
asset quality.

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