ANALYSTS SAY: Buy, Sell, Hold (12 Sept)

CGS CIMB

CGS CIMB

Hyphens Pharma International
Healthy pipeline of new products

■ We upgrade our FY24F-26F EPS estimates by 12.8-13.8% due to better revenue momentum given its pipeline of products under registration.
■ This is as HYP achieved record revenue of S$99.6m in 1H24 (+33.4% yoy/+3.9% hoh), led by specialty pharma and proprietary brand segments.
■ HYP’s GP margin compressed 2.6% pts yoy in 1H24 due to unfavourable forex translation effects, but opex control partially offset bottomline impact.
■ Reiterate Add with a higher DCF-based TP of S$0.40 (WACC: 13.6%).

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Singapore Exchange

Pricing in trading volume growth

■ We believe the market is now pricing in an average c.S$1.3bn SDAV – comparable to volumes in FY21 post the previous Fed fund rate cut cycle.

■ We think there is still room to re-rate, albeit limited. This is premised on stronger forex and commodity revenues and continued hedging demand.

■ Reiterate Hold with a higher TP of S$12.50. While interest rate cuts may spur trading and hedging volumes, softer treasury income is a downside risk. 

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UOB KAYHIAN

LIM & TAN

ComfortDelGro Corporation (CD SP)
Higher Fares And More Contract Wins

CD announced that its wholly-owned Australian subsidiary has been awarded three new bus contracts in Melbourne  Australia, increasing the group’s existing bus fleet. In line with expectations, the PTC also announced that public transport fares in Singapore would increase by up to 6.0% in end-4Q24 due to inflationary pressures, benefitting public transport operators such as CD. However, with a lack of near-term catalysts, we maintain HOLD with the same target price of S$1.56.

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Dyna-Mac (S$0.50, trading halt) announced that Hanwha Group has announced a tender offer for the shares of Dyna-Mac Holdings Ltd. Through the tender offer, Hanwha Aerospace and Hanwha Ocean intend to secure management control. Hanwha Aerospace and Hanwha Ocean will conduct the tender offer through a local SPC (Special Purpose Company) in Singapore. The purchase price is set at S$0.6 per share. For the tender offer, Hanwha Aerospace and Hanwha Ocean will fund up to approximately KRW 600 billion (SGD 586million) (assuming 100% ownership at close of Offer).

At the offer price of 60 cents, and assuming full dilution from the conversion of Dynamac’s warrants, Dynamac’s enlarged market cap will be $728mln. With its net cash position of $308mln and annualized FY24 earnings of about $80mln, the offer price values the company at a fully diluted PE ratio of 9x and ex-cash PE of only 5x. The low valuations coupled with consensus target price range of between 64-71 cents suggest that investors can “HOLD” tight to Dynamac shares and await for a potentially better offer price given that the offeror did
not mention that this initial offer is their final offer.

Prudential PLC

Key takeaways from SG post-1H24 NDR

■ We believe strong HK domestic insurance sales can continue in 2H24F (1H24: 25% yoy), driven by new agent recruits (122% growth yoy in 1H24).

■ Pru’s NBP (ex-economics) in China should return to growth in 2H24F, in our view, due to favourable base effects for sales, plus margin tailwinds.

■ Pru Singapore looks well placed to continue to benefit from strong insurance demand from HNW customers, as a key factor driving its 1H24 growth.

■ Reiterate Add. TP unchanged at HK$116. Pru remains a sector top pick.

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Utilities – Malaysia

A Strong 2Q24; Malaysia To Play Catch Up In Terms Of Plant-ups

Sector earnings came in within our expectations as generation profits boosted the net profit of TNB and Malakoff. Gas Malaysia benefits from volume growth. 2Q24 key takeaways are: a) daily reserve margin of 15-30%, b) 2GW of short-term PPAs extended, c) 6GW of new power plants awarded and operational in 2030/31, and d) data centre demand estimated at 4GW. Maintain MARKET WEIGHT. Top picks: Malakoff and Pekat. Blue-sky fair value for TNB is RM14.50 (+2SD PE)

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