ANALYSTS SAY: Buy, Sell, Hold (16 Dec)

LIM & TAN SECURITIES

City Developments (CIT SP)
Reasonably Solid 2023 Outlook Given Strength In Some Business Segments

We continue to like that CDL is continually building up its recurring income
stream portfolio in the defensive PBSA (Purpose Built Student Accomodation) business in the face of a possible recession expected to occur in the medium term. With this latest foray, we also like that CDL has taken advantage of the relatively cheap pound to purchase these assets in the face of an improving Covid-19 situation. Student accommodation assets are seen to be more “recession proof” given the inelastic demand of education services.

CDL’s market cap stands at S$7.5bln and currently trades at 8.5x forward
PE and 0.8x PB, with a yield of 2.5%. Net gearing stands at 52% and interest
cover is at 12.1x and consensus target price stands at S$9.62, representing 16.5% upside to current share price. We maintain an “Accumulate on Weakness” recommendation as we see CDL as a beneficiary of the re-opening of economies around the globe post the Covid-19 lockdowns.

Marco Polo Marine Ltd / MPM ($0.043, unchanged) a reputable regional integrated marine logistics company, is pleased to announce the signing of a landmark Memorandum of Understanding (“MOU”) between its Taiwan-based subsidiary, PKR Off shore Co., Ltd, and Vestas Taiwan Co., Ltd, for the maiden deployment of its new Commissioning Service Operations Vessel (CSOV). The new CSOV, which can accommodate up to 110 persons, will be deployed across various off shore wind farms in Taiwan, Japan and South Korea, over a 3-year period, based on a minimum utilisation commitment per annum. The vessel is currently under construction at Marco Polo Shipyard at Batam, Indonesia, and will commence operations towards the end of 2024.

Given the strong growth potential of the wind farm industry and MPM’s maiden foray into the sector, we believe the company would be on the radar of “ESG” focused funds. At 4.3 cents, MPM is capitalized at $153 million and trades at 11x FY23 ending Sept’23 consensus estimates and price to book is 1.1x. Consensus earnings for FY24 are expected to grow from $15mln to $17mln, putting prospective PE at 9x.

UOB KAYHIAN

LMS Compliance (LMS SP)
The Future Of Laboratory Testing

LMS Compliance is involved in the laboratory testing and assessment for its customers and also helps them to meet the regulatory requirements of their respective industries. This allows LMS to boast a steady growth profile and recurring revenue. The group’s conformity assessment technology has elevated revenues through the digitalisation of laboratory and certification processes. Importantly, LMS is trading at about 14x 2021 PE and intends to achieve 20% dividend payout ratio for 2022-24.

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Trip.com (9961 HK)
3Q22: Results Beat Expectations, International Travel Continues To Lead Recovery

Trip.com delivered solid 3Q22 results. Net revenue of Rmb6.9b for 3Q22 grew 29% yoy and was 34% below pre-COVID-19 levels, beating the street’s estimates. Gross margin expanded by 4.4ppt yoy to 81.6%, above consensus. Non-GAPP operating margin was 17.5%, better than our estimates. Non-GAAP net profit was Rmb1b, supported by strengthened product capabilities and improved operating efficiency. Maintain BUY with a higher target price of HK$355.00 (US$46.00).

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