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Tenaga Nasional
Demand supports higher capex for RP4
■ We see a strong case for significantly higher T&D capex under RP4 to meet
power demand which is tracking well above historical trends.
■ GenCo earnings are also turning the corner on the back of operational
improvements. We raise our 2025F-2026F PAT by 3-9% to factor this in.
■ Valuations remain undemanding, in our view, despite the strong YTD
outperformance. Reiterate Add with a higher SOP-based TP of RM19.10.
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Tencent
Takeaways from Tencent Global Digital Ecosystem Summit
■ We attended the Tencent Global Digital Ecosystem Summit on 5-6 Sep in Shenzhen.
■ Tencent announced to the public the launch of an upgraded large AI model, Hunyuan Turbo, which has been integrated into over 700 of Tencent’s internal functions.
■ Tencent has made great strides to serve global users of its cloud and AI services.
■ Tencent recently announced a cooperation with Alibaba to launch Wechat Pay in Tmall/Taobao stores, which should be positive in driving up online payment revenue.
■ Reiterate Add with an unchanged DCF-based TP of HK$524.
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BRC Asia (BRC SP)
3QFY24: Soft Results; Expect A Strong Finish To FY24
9MFY24 headline earnings were higher at S$72.6m (+15% yoy), driven by Singapore’s ongoing construction upcycle. However, 3QFY24 saw a fall in core net profit of S$17.6m
(-22% yoy) due to a shortage of engineering resources and inspection delays, slowing the pace of construction activities and project deliveries. Management expects an improvement in project off-take going into 4QFY24. In our view, BRC is fully valued at current price levels; thus we downgrade to HOLD with a lower target price of S$2.29.BRC Asia
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VS Industry (VSI MK)
Growth Remains Intact; Valuation Reset Presents A Favourable Entry Point
The sentiment-driven valuation reset by a trio of fear factors presents a favourable entry point on a compelling risk-reward profile. We expect a sequentially stronger 4QFY24 backed by healthy loadings from its key customers alongside margin enhancement from upstream vertical integration. VS is still the front-runner of trade diversion, with discussions for prospective contracts at different stages of evaluation. Maintain BUY. Target price: RM1.42.
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Cromwell European REIT
Rating BUY (as at 9 September 2024)
Last Close EUR 1.53
Fair Value EUR 1.87
High quality asset at a discount
• Beneficiary to the flight-to-quality trends given its high quality, future-proof green assets
• Pivoting asset mix towards the logistics and industrials (L&I) segment positions itself towards structural tailwinds
• One of three Singapore real estate investment trusts (S-REIT) to have an ESG rating of “AA” by MSCI
Investment thesis
Cromwell European REIT (CEREIT) is a S-REIT that focuses
on investing in commercial real estate assets across Europe. As of 30 Jun 2024, CEREIT owns a portfolio of 107 properties, primarily freehold, strategically located in major gateway cities across the Netherlands, France, Italy, Germany, Poland, Denmark, Czech Republic, Slovakia, Finland, and the United Kingdom. The portfolio is divided into 54% L&I properties and 44% office spaces by assets under management (AUM). CEREIT sets itself apart by offering high-quality assets in prime locations and maintaining a diversified tenant mix. And although the REIT has seen declining distributions as a result of asset divestments and rising financing costs, its remaining portfolio of high-quality assets offer potential for long-term future growth and income resiliency in the near term. With a healthy gearing ratio below 40% and a significant discount to net asset value (NAV) due to the tough economic conditions in Europe, we believe CEREIT presents an attractive opportunity for S-REIT investors seeking high-quality returns and exposure to the European market.
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