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CGS CIMB |
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Singapore Banking Monthly Singapore interest rates stagnate
May’s 3M-SORA was up 1bp MoM to 3.61%, 3M-HIBOR was up 82bps MoM to 4.41%. HIBOR is down 88bps this year. Singapore domestic loans dipped 5.86% YoY in April, below our estimates. Loans previously contracted at this magnitude was in 2016. The CASA balance dipped slightly to 18.8% (Mar23: 18.9%). Maintain OVERWEIGHT. We remain positive on banks. Bank dividend yields are attractive at 5.7% with upside surprise in dividends due to excess capital ratios and push towards higher ROEs. SGX is another major beneficiary of higher interest rates (SGX SP, BUY, TP S$11.71).
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Trip.com Strong support from pent-up demand
■ Trip.com reported 1Q23 revenue of Rmb9.2bn (+124% yoy, +83% qoq), beating our expectation, thanks to strong pent-up demand for domestic travel. ■ Non-GAAP net income was Rmb2bn in 1Q23 (vs. a loss of Rmb36m in 1Q22), beating our expectation, owing to a strong topline and effective cost-control measures. ■ Management remains positive on the growth trajectory for 2Q23F and FY23F, driven by pent-up demand for domestic travel and recovery in outbound travel capacity. ■ We expect FY23F revenue to grow 104% to Rmb41bn (beating FY19 revenue by 15%) and FY23F non-GAAP net profit margin to reach 15.4% (vs. 18.3% in FY19). ■ Reiterate Add with a higher DCF-based TP of HK$397, as we believe Trip.com will benefit from the recovery in outbound travel capacity and increase in travel demand.
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CGS CIMB |
UOB KAYHIAN |
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Farm Fresh Berhad Time to reflect
■ We retain our Hold call on Farm Fresh (FFB) with a reduced target price of RM1.37 (previously RM1.60) following a review of our estimates. ■ Margin repair in 2QFY24F should offer valuation support but a clear trajectory back to higher ROEs will, in our view, be key to a significant rerating. ■ Valuations reset to GGM model (prev. 28x CY24F P/E) to better reflect future profitability – 16.5% ROE, 8.5% COE, 5% LT. growth.
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Valuetronics (VALUE SP) FY23: Slightly Above Expectations, Conservative Amid Global Headwinds
FY23 net profit of HK$123m (+8.3% yoy/+12.6% hoh) was slightly above our forecast, forming 106% of our full-year estimate, due to a lower-than-expected revenue decline. VALUE's outlook remains conservative as it expects the ripple effect of the supply chain bottlenecks to last beyond 2023. Other uncertainties include the Russia-Ukraine conflict, US Fed rate hikes and rising inflationary pressures. Maintain HOLD with an 8% higher PE-based target price of S$0.56 ($0.52 previously).
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| LIM & TAN | UOB KAYHIAN |
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ST Engineering ($3.65, up 1 cent) disclosed on 08-Jun-23 that its subsidiary, ST Engineering iDirect, a global leader in satellite communications, had announced that service provider Marlink has upgraded to the latest Dialog® 2.5.1 release to take full advantage of its global network, increasing performance and simplifying the operations of customers across several markets. Overall, we continue to like ST Engineering due to its:- (i) expected earnings growth forecasted for FY23 and FY24 where contributions from Transcore would start becoming more significant; (ii) attractive and sustainable dividends; and (iii) robust order book. For FY23F and FY24F, we are anticipating its net profit to come in at S$579.5mln (+8.3% yoy) and S$677.6mln (+16.9% yoy) respectively. Recommend ACCUMULATE.
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HM Sampoerna (HMSP IJ) An Encouraging Year Ahead With Potential Recovery In NPAT
2023 could be an encouraging year for cigarette manufacturers such as HMSP. This is due to: a) the excise tax increase for 2023 being mild at about 10%, b) a potential recovery in consumption volume, c) potential margin expansion as pulp and plastic packaging prices decline, and d) pricing power returning to producers. Cigarette consumption up-trading could happen in 2023. HMSP has completed the Smoke Free IQOS factory. Maintain BUY with a new target price of Rp1,300.
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