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Malaysia Strategy

Monthly Wrap for May 2024


■ The KLCI rose 1.3% mom to close May 24 at 1,597 pts, with YTD gain of 9.8% the best among MIST markets.

■ Foreign investors reversed their position from net selling in Apr 24 to net buying in May 24, shrinking 5M24 cumulative net sell flow to RM0.8bn.

■ All Bursa indices recorded gains again in May 24 with the KLCI outperforming the SET and JCI in May 24, driven by MR DIY and YTL Corp.



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Want Want China

Better margin expansion


■ Want Want will report its FY3/24 results on 25 Jun. We expect it to deliver topline growth of 4.2% and net profit growth of 15.3% in FY3/24F.

■ The stronger net profit growth in 2HFY24F (+21.4% yoy vs. 8.5% yoy in 1H) would be mainly due to lower raw material prices, especially for milk powder.

■ We expect the lower raw material price trend to continue in FY3/25F, further driving Want Want’s GPM expansion.

■ Reiterate Add with a higher DCF-based TP of HK$6.3, as we expect entering new retail channels and GPM expansion to drive growth in FY3/25F. 



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Phillip Singapore Monthly – May24

Stagflation risk rising


• Singapore equities were up 1.3% in May. It is the 3rd consecutive month of gains, the longest streak since 1Q21. Financials drove the returns this month with a gain of 2.2%.

• Finally, AI was not the hottest sector last month. It was shipping containers. Freight rates spiked 60% in May and tripled on a YoY basis. Yangzijiang Shipbuilding's share price jumped by 29% with European container companies surging more than 20%.



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Singapore Airlines ($6.80, up 3 cents) has inked a memorandum of understanding (MOU) for a new partnership with Saudi Arabia’s Riyadh Air, a new airline due to be commercially operational in 2025.

Under the MOU, both carriers will explore opportunities for interline connectivity on each other’s services while also working on potential areas of commercial cooperation, such as codeshare arrangements.

SIA’s market cap is $20.2bln, and it currently trades at 10.1x forward PE and 1.4x PB, with a dividend yield is 7.0%. The consensus target price is S$6.88, representing 1.2% upside from the the current share price. We maintain our “Accumulate” rating on SIA given its continued strong near term outlook due to strong North Asian demand and Cargo demand recovery.

Valuations are not demanding and the balance sheet is very robust. The above partnership will also allow SIA deeper penetration into the Middle East market.


Valuetronics (VALUE SP) FY24: Earnings Within Expectations; New Customers To Start The Next Chapter Of Growth

VALUE’s FY24 net profit of HK$160m (+30% yoy) was in line with our expectations. FY24 gross profit grew 1% yoy as margins expanded from its rebalanced customer portfolio, offsetting revenue decline due to lower material costs, improved supply chain visibility and lower labour costs. The outlook is encouraging with four new customers contributing their first full-year revenue in FY25 along with other potential new customers. Maintain BUY with an 8% higher target price of S$0.78.



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