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PHILLIP SECURITIES |
PHILLIP SECURITIES |
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BRC Asia Ltd Supply chain bottlenecks impacted revenue
▪ 3Q24 results were below expectations. Revenue and adj. PATMI were 66%/67% of our FY24e forecast. Adj. PATMI declined 22% YoY to S$17.6mn. Approval delays, from engineering to infrastructure, have hampered project deliveries. Headline results include a S$16.5mn gain from the disposal of associate Pristine for S$18.5mn (equity plus shareholder loan).
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Singapore REITs Monthly: July24 Distributions still under pressure
▪ The S-REITs Index recovered 5.4% in July, following its 1.8% decline in June. The top performer for the month was Prime US REIT (Prime SP, BUY, TP US$0.22) gaining 62.4% after the successful refinancing of its main credit facility. The worst performer was Daiwa House Logistics Trust (DHLT SP, non-rated), falling 1.8% as the weak yen continues to erode DPU. The overseas commercial sub-sector was the top performer in July, gaining 26.6%, driven by the US office REITs. In contrast, the worst-performing sub-sector was hospitality, which grew by 2%, as global RevPAR growth moderated.
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UOB KAYHIAN |
UOB KAYHIAN |
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STRATEGY – SINGAPORE
After Powell’s Jackson Hole speech on 23 August, we see a turning point starting with a US Fed rate cut in Sep 24 and lower rates heading into 2025. In the Singapore market, REITs and the property sector should benefit, as should highly-geared companies and those looking to recycle capital. Our current forecasts have incorporated lower NIMs for banks which we believe are protected by their high dividend yields.
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Ping An Insurance Group (2318 HK) 1H24: Inflection Point Is In Sight
Ping An’s 1H24 results were in line with the marginal OPAT decline. The life and P&C businesses earnings growth were supported by better investment results and improved CoR. The life business’ NBV growth was a miss due to a larger FYP decline against a high base but margin improvement and turnaround in agency headcounts were the bright spots. The continued NBV growth and strong rebound of OPAT in 2H24 could lead to a valuation re-rating. Maintain BUY. Target price: HK$55.00.
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| UOB KAYHIAN | MAYBANK KIM ENG |
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Sports Toto (SPTOTO MK) 4QFY24: Commendable Numbers
SPTOTO’s 4QFY24 results came in within expectations as gaming revenue further recovered and achieved about 87% of pre-pandemic levels. We anticipate SPTOTO would deliver progressive earnings recovery and also provide a compelling prospective yield of about 8% in FY25. Meanwhile, investors’ sentiment should recover and focus should return to the group’s bargain valuations, especially since the political landscape has largely stabilised after GE15. Retain BUY with a higher target price of RM1.98.
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Singapore Markets When interest rates fall
Jackson Hole positive for S-REITS, Industrials, Telcos Expectations are high for Fed policy rate cuts come September. This should have positive impacts on companies with large debt servicing burdens. Our screening shows the biggest beneficiaries in property, industrials and agritraders. Sustained and deep cuts should structurally influence upside risks to S-REITs and Industrials by lowering cost of capital and rotating investments away from fixed income. Historically, Telcos are also seen to benefit from going the opposite direction to interest rates. Our rate-cut winners include: CICT, CDLHT, CLAR, FCT, FEHT, NETLINK, STE, SUN.
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