buysellhold july.23




Dare+ investments brought forward


■ 1Q24 net profit (+8% yoy) was a slight beat on lower net finance costs. Service EBITDA margin of 22% in 1Q24 is in line with its FY24F guidance.

■ StarHub is accelerating its Dare+ investments in FY24. We expect cost savings and capex reduction to show more meaningfully in FY25F.

■ StarHub believes its low leverage positions the group well for potential M&A opportunities. Reiterate Add, with a higher DCF-based TP of S$1.30.


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A slower start to the year


■ CD’s 1Q24 core PATMI of S$41m (-19% qoq, +24% yoy) disappointed, which management attributed to cost timings and weaker seasonality.

■ CD remains confident in its business trends and outlook; we retain our 15% yoy FY24F EPS growth forecast on UK margin recovery and recent M&As.

■ CD looks to further grow its international presence by collaborating with partners to win tenders and vis earnings-accretive M&As. Reiterate Add. 



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Sasseur REIT

Resilient operations


■ 1Q24 EMA rental income of S$32.6m was in line, at 24.7% of our FY24F forecast.

■ Portfolio occupancy remained high at 97.9% in 1Q24; Hefei and Kunming outlets achieved higher yoy and qoq tenant sales in 1Q24.

■ Reiterate Add with a lower DDM-based TP of S$0.93



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Silverlake Axis Ltd

Margin hit


■ 3QFY6/24 net profit was 51% below our/consensus estimates due to weaker GPM (licencing fees tapering) and higher-than-expected opex (staff costs).

■ Contract win momentum and c.RM1.2bn deal pipeline maintained in 3QFY24 but we think its deal mix of incremental upgrades may lower GPM run-rate.

■ Downgrade to Hold with a lower TP of S$0.31 (pegged to 14x CY25F P/E) as we factor in heftier opex (which may take time to lower) and lower GPM. 



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FY24e sales will be driven by promotional events


 1Q24 rental income in SGD terms was within expectations at 25% of our FY24e estimates (S$32.6mn, -1.4% YoY, +1.2% YoY in RMB), representing a S$0.5mn YoY decrease due to the weakening RMB against the S$ by 2.5%.

 Outlet sales in RMB were 24% of our estimate (RMB 1258.7mn, -2.6% YoY), leading to a 2.2% YoY decrease of the variable component as 1Q23 had a high base post-reopening of China after the pandemic. The REIT has changed to a half-yearly dividend distribution. 


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ST Engineering Ltd

All engines roaring, but satellite no signal


▪ 1Q24 revenue update was within our expectations at 25% of our FY24e. Revenue grew an impressive 18% YoY to S$2.7bn. Around 2/3 of the growth was from commercial aerospace revenue that jumped 32% YoY to S$1.1bn. 1Q24 DPS was 4 cents unchanged.

▪ Rising aircraft flying hours, slower introduction of new engines, and increased capacity boosted revenue in aircraft MRO. Defence and public security revenue rose 14% YoY from increased demand for digital services and higher munitions sales. Satellite operations is still looking to transition customers to its multi-orbit next-gen platform.



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