ANALYSTS SAY: Buy, Sell, Hold (2 Dec)

CGS CIMB

CGS CIMB

Banks

Improved loan growth in Oct 2024

■ Banking system loan growth stood at 1.5% yoy in Oct 24. The positivity came from domestic loans (+2.7% yoy) as regional growth slowed (-0.7% yoy).

■ System deposit growth is stabilising. Its +3.9% yoy growth in Oct 24 came from both S$ and FCY. CASA growth is gaining momentum. LDR is stable.

■ Reiterate sector Neutral. We think investors have priced in the more positive outlook on NIM and wealth management in FY25F from fewer rate cuts.

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PHILLIP SECURITIES

UOB KAYHIAN

Centurion Corporation Limited

New dormitory as growth driver

▪ The new 1,650-bed Purpose-Built Dormitory (PBD) Westlite Ubi is expected to be completed by December 2024. T5 construction will start in 1H25 and with lower supply of PBDs in the East, we believe 5-10% higher rental rates can be charged for Westlite Ubi. Occupancy should gradually ramp up, and we expect 70-80% occupancy by April 2025. 

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STRATEGY – SINGAPORE

Alpha Picks: Positive performance for Nov 24

Given the STI’s robust performance in Nov 24, our Alpha Picks portfolio underperformed the STI slightly by 1.4ppt, but still rose 3.7% mom on a market cap weighted basis and 1.2% on an equal-weighted basis respectively. The solid performance was driven by CSE, OCBC and DFI while GENS, MPM and VMS underperformed. Our Alpha Picks portfolio has now outperformed the STI in 12 out of the past 14 months.

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LIM & TAN

Singapore Post ($0.58, unchanged) announced that it has entered into a sale and purchase agreement with Pacic Equity Partners (“PEP”) for the sale of its Australia business, Freight Management Holdings Pty Ltd (“FMH”). PEP shall acquire the Australia business at an enterprise value of A$1.02 billion (approximately S$897.6 million), which translates into A$775.9 million (approximately S$682.8 million) in cash and generates an expected gain on disposal of approximately S$312.1million, subject to adjustments determined at the time of Completion and any other further adjustments.

Singapore Post’s market cap stands at S$1.3bln and currently trades at 20x forward PE and 0.84x PB, with a dividend yield of 2%. Our target price stands at S$0.64, representing 10.3% upside from current share price. This sale will unlock value of c.S$897.6mlnand Singpost will recognize a S$312.1mln gain on disposal. Proceeds will be used to pare off their heavy debt, thus reducing interest expense and a portion of the proceeds will also be used to pay special dividends. Considering that Singpost’s AU biz is largely funded by debt, this represents a good ROI for Singpost, and will see Singpost’s NTA increase from S$0.349 to S$0.689 and EPS will increase from S$0.035 to S$0.162. We continue to await the review and reset of SingPost strategy following the completion of this sale. We maintain an “Accumulate on Weakness” rating on SingPost.

IHH Healthcare ($2.19, up 0.02) reports higher core net profit for Q3 2024:- Q3 2024: PATMI (ex EI) up 43% on higher patient volumes and taking on more complex cases; paid out interim dividend of 4.5 sen per share

- YTD 2024: strong core operational performance with double-digit growth across revenue, EBITDA, and PATMI (ex EI)

- Reinforcing healthcare leadership: largest private healthcare provider to implement CDC guidelines on antimicrobial stewardship; adding close to 1,000 beds to better serve patients.

IHH Healthcare is capitalized at $19.3 billion and trades at 33x forward PE and yields just under 2%. Consensus 1 year target price of $2.40 implies a potential upside of 10%. On a year to date basis, IHH’s share price has risen 27%, outperforming the STI’s 15% rise and Raffles Medical’s 19% decline and trades at a premium to the STI’s 12x PE and also Raffles Medical’s 23x PE. With valuations looking fair and limited upside to consensus target price, we have a “HOLD” recommendation on IHH Healthcare.