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2024
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CGS CIMB |
UOB KAYHIAN |
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Aztech Global Ltd Pasir Gudang plant visit
■ Aztech hosted a plant tour for sell-side analysts at its Pasir Gudang plant in Johor Bahru, Malaysia, on 26 Sep 2024. ■ We think the 3Q24F utilisation rate at the Pasir Gudang plant could be c.50%, with room to take on more orders to improve the rate. ■ Reiterate Add and S$1.21 TP. Potential downside risks are slowing order book and foreign exchange losses in 3Q24F.Aztech Global Ltd Pasir Gudang plant visit ■ Aztech hosted a plant tour for sell-side analysts at its Pasir Gudang plant in Johor Bahru, Malaysia, on 26 Sep 2024. ■ We think the 3Q24F utilisation rate at the Pasir Gudang plant could be c.50%, with room to take on more orders to improve the rate. ■ Reiterate Add and S$1.21 TP. Potential downside risks are slowing order book and foreign exchange losses in 3Q24F.
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China Sunsine Chemical (CSSC SP) Safe Proxy To China And Oil Price Recovery With Good Yield; Raise Target Price By 26%
As the Chinese economy recovers with the recent stimulus rollout and higher oil prices brought about by the Middle East conflict, Sunsine’s demand and ASPs may benefit. We believe Sunsine is a safe proxy to China’s recovery play as it is deeply undervalued at 2x ex-cash 2024F PE, trading at a 40% discount to its book value. Sunsine’s regular share buyback is a signal of its positive outlook and stock price undervaluation. Maintain BUY with a 26% higher target price of S$0.58 (from S$0.46).
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UOB KAYHIAN |
UOB KAYHIAN |
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STRATEGY – MALAYSIA Budget 2025 Preview: Building Sustainable Growth
While Budget 2025 (to be tabled on 18 Oct 24) is seen as largely market-neutral, it sets a solid fundamental undertone for future economic growth and the equity market, and is supportive of the ringgit’s upward momentum. Budget 2025 is expected to focus on fiscal prudence and the “rakyat’s” well-being, but remains expansionary hence progrowth and pro-FDI. The key beneficiary sectors are property and construction, while notable stock winners include Eco World, Lagenda, Gamuda and Mr DIY.
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Metals And Mining – China Gold: Rally Takes A Breather; Downside Cushioned By Escalating Geopolitical Tensions
Gold prices are taking a breather around US$2,650/t oz amid profit taking activities and a rebound in the US dollar. High gold prices have hampered jewellery and central banks’ demand. ETF inflow will support the upward momentum, with North America/Europe showing renewed interest in gold. Gold prices could remain rangebound while searching for new upside catalysts with downside cushioned by escalating geopolitical tensions. Maintain MARKET WEIGHT.
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| LIM & TAN | LIM & TAN |
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We highlight key points in Grand Banks Yacht / GBY (S$0.55, unchanged) FY24 annual report: I am delighted to report that Grand Banks has delivered a remarkable performance. Revenue reached an all-time high of S$133.7 million for FY2024, propelled by increased boat-building activities at our manufacturing yard in Pasir Gudang, Malaysia. Gross profi t improved to S$50.7 million in FY2024 from S$36.8 million in FY2023, while net profi t more than doubled to a record-high S$21.4 million, amid improved production efficiency. Our net order book remains healthy at S$120.0 million as of 30 June 2024 (S$159.4 million as at 30 June 2023), and cushions us against short-term macroeconomic headwinds. At S$0.55, GBY is capitalized at S$101.5mln and trades at 4.7x P/E, 2.9x ex-cash P/E and 1.2x P/B. We think GBY’s valuations paint a picture of a distressed company, which is a stark contrast to what is happening in the market today. As GBY’s orders move towards larger boat sizes which command higher average selling prices, margins are likely to see a boost as well. GBY now stands as a distinguished brand celebrated for its distinctive and iconic aesthetics, reinforced by the establishment of its own sales channel. GBY’s share price has almost doubled since our initiation last year, reflecting its doubling in earnings, and if earning trajectory can continue to move higher moving forward, share price should continue to track its earnings momentum higher as well. We see GBY as being “first amongst its equals”.
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We highlight the following points from an article in this morning’s Business Times on Beng Kuang Marine (S$0.27, up 1.5 cents): When a live cattle carrier owned by Beng Kuang Marine was detained in Indonesian waters, chief executive officer Yong Jiunn Run thought it seemed like the right time to call it a day for the ship chartering business. BKM’s market cap stands at S$53.8mln and currently trades at 8.4x forward PE and 3x PB. Consensus target price stands at S$0.29, representing 7.4% upside from current share price. utilization is consistently high. We think the recent price decline due to a vessel building delay represents a pullback opportunity to add MPM. We like Dyna-Mac (FY24PE: 12.9x, PB 6.5x, TP:71.5 S cts) given its latest explosive results and that Hanwha has launched a takeover price at S$0.60, but the family owning DM has rejected the offer, suggesting Dyna-Mac conƟ nues to be undervalued and also gives rise to a potential chance for Hanwha to increase it’s offer price. We also like Mermaid Maritime (FY24 PE:12.1x PB: 1.1x) for its strong order book, operating leverage and exposure to the DSV space and believe that the elevated high DSV charter rates, increase demand for oil well decommissioning and lack of DSV supply will pave the way for higher future earnings. |
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- Leong Chan Teik
| By now, everyone is more or less expecting a sustained recovery in China and HK stocks following the Chinese government's measures to stimulate the Chinese economy. Even stocks on SGX which are exposed to the Chinese economy have seen a nice uplift too.  Nearly a fortnight ago, as stocks started to stir, we asked 11 private Singaporean investors who know one another fairly well, to share their picks, with a goal in mind: Select stocks that will finish the year with the highest percentage gain. As the table below shows, their picks span a wide range of industries. They reflect the investors' diverse interests, diverse investing approaches and risk appetites. Thus their selections are not recommendations for investment for readers. Your risk profile and investment objectives may differ significantly from theirs. |
Those with double-digit gains so far are highlighted in yellow:
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Investor |
Stock |
Ccy |
Start |
Recent |
% change |
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1 |
Hims & Hers Health |
US$ |
17.26 |
17.66 |
2.3 |
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Cosmo Lady |
HK$ |
0.25 |
0.305 |
22.0 |
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Cyprium Metals |
A$ |
0.032 |
0.033 |
3.1 |
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2 |
Tesla |
US$ |
257 |
250.08 |
-2.4 |
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Nam Cheong |
S$ |
0.47 |
0.455 |
-3.1 |
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ISDN |
S$ |
0.31 |
0.32 |
3.1 |
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3 |
CMCDI |
HK$ |
12.38 |
14.28 |
15.3 |
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PC Partner |
HK$ |
4.15 |
4.96 |
19.5 |
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4 |
Launch Tech |
HK$ |
5.2 |
5.65 |
8.7 |
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Sprott Phy Uranium |
US$ |
19.86 |
20.21 |
1.7 |
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Wolfspeed |
US$ |
8.89 |
9.48 |
6.6 |
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5 |
CMCDI |
HK$ |
12.38 |
14.28 |
15.3 |
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CCID |
HK$ |
0.87 |
0.93 |
6.9 |
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C&T |
HK$ |
1.95 |
1.96 |
0.5 |
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6 |
TK Group |
HK$ |
1.7 |
1.81 |
6.5 |
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Hang Lung Ppt |
HK$ |
6.47 |
7.96 |
23.0 |
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Mandarin Oriental |
S$ |
1.7 |
1.76 |
3.5 |
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7 |
CMCDI |
HK$ |
12.38 |
14.28 |
15.3 |
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Sino Ocean |
HK$ |
0.71 |
0.55 |
-22.5 |
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8 |
Hawson Iron |
A$ |
0.021 |
0.023 |
9.5 |
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Galan Lithium |
A$ |
0.11 |
0.115 |
4.5 |
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9 |
Sayona |
A$ |
0.029 |
0.031 |
6.9 |
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Pilbara |
A$ |
3.17 |
3.05 |
-3.7 |
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10 |
Seatrium |
S$ |
1.76 |
1.99 |
13.1 |
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Genting |
S$ |
0.835 |
0.885 |
6.0 |
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11 |
Hor Kew |
S$ |
0.435 |
0.455 |
4.6 |
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Digilife |
S$ |
1.13 |
1.14 |
0.9 |
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Far East |
S$ |
0.076 |
0.075 |
-1.3 |
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Here are briefs on 2 of the top stock performers:
• CMCDI was chosen by 3 of the investors, and it has turned out to be a good performer. Key to the price action, or future price action, is the activism of a substantial shareholder ASM.
Fundamentally, CMCDI is on good grounds. One of the investors shared:
| "CMCDI is trading at ~0.45X NAV and owns stakes in highly liquid listed companies like China Merchants Bank and Iflytek. Just these alone are worth more than the market cap of CMCDI. It also owns stakes in many valuable unlisted companies / funds like NBA China, China Unionpay (Visa/Mastercard of China), Pony AI (self-driving cars), Moonshot AI (similar to ChatGpt but in China) etc. "Despite these potentially valuable assets and paying regular dividends including occasional special dividends, the discount to NAV had only increased over the last few years." |
• Hang Lung Properties is the absolute winner so far with a 23% gain, thanks to the Chinese government's stimulus measures for its economy resulting in an uplift in sentiment towards property counters.
The investor who picked it said:
| "Hang Lung owns prime retail malls in China and Hong Kong. China accounts for 2/3 of revenue. It has little property development activities and the bulk of revenue is from recurring rental income. 1H24 was one of the most challenging periods for the group, with tenant sales at its luxury malls down by over 20%, while ex-Shanghai malls fell by single digits. "At current levels, share price is still depressed at 0.23x P/Book and dividend yield above 7%. Operating environment is expected to remain challenging in the near term but Hang Lung’s malls are mostly super prime in the cities it operate in and anchored by strong tenants. "Management expects gearing to peak in the mid-30% range before declining as it is in the midst of completing Westlake 66 in Hangzhou. Also, the declining interest rate environment is expected to relieve some of its interest rate burden." |
While dividends from Hang Lung Properties have been strong and consistent, this year may see a drop. The company cut its interim dividend from 18 HK cents to 12 HK cents, and may do likewise for the final dividend, owing to weaker earnings and capex requirements for a new mall and some mall upgrades.
For more, see: HANG LUNG PROPERTIES: This stock "has too much value to ignore," says DBS Vickers
| Has the recent rally been partly driven by investors rushing to buy stocks due to a fear of missing out on potential gains? As the Chinese Golden Week holidays (1-7 Oct) end, will investors demonstrate a fresh burst of enthusiasm next week? On a fundamental level, there is anticipation that additional fiscal measures may be announced by the Chinese government, which will sustain the rally. Analysts suggest that Beijing might introduce further consumer support initiatives and property market interventions to maintain investor confidence and economic momentum. We will update on all the stock picks' performance from time to time. Stay tuned. |
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UOB KAYHIAN |
UOB KAYHIAN |
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CapitaLand Integrated Commercial Trust (CICT SP) Increasing Dominance Of Singapore’s Retail Scene
ION Orchard is an iconic mall at the junction of Orchard Road and Scotts Road and is connected to Orchard MRT Station. Its estimated NPI yield of 5.0% compares favourably with recent transactions Nex (NPI yield: 4.8%), Changi City Point (4.3%) and Jurong Point (4.8%). The acquisition is accretive to DPU by 1.2%. We raise our 2025 DPU forecast by 6% due to contribution from ION Orchard, expansion in NPI margin and lower interest rates. Maintain BUY. Target price: S$2.59.
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Link REIT (823 HK) Takeaways From Pre-blackout Calls: Welcoming The Rate Cut Cycle
Management gave an update on the 1QFY25 performance. Despite weak consumption, its Hong Kong and major China portfolios registered a slightly positive rental reversion, beating guidance. Entering a rate cut cycle, LINK REIT has room to raise net gearing to no higher than 30%. We look forward to yield-accretive M&As in the near future. We lowered the risk-free rate and raised our target price by 5.5% to HK$45.08, representing a 2025 yield of 5.9% and yield spread of 2.1%. Maintain BUY.
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MAYBANK KIM ENG |
MAYBANK KIM ENG |
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Airports of Thailand (AOT TB) New master plan to support long-term growth
Solid earnings growth from rising tourist numbers We retain our BUY on AOT with a higher TP of THB75.0 as we roll forward our valuations to FY25E. We expect FY25E earnings growth of 22% YoY due to a solid recovery in inbound tourists. We estimate 41m arrivals in 2025 (+14% YoY). We see potential 5-6% upside to our FY26-27 core profit forecasts from the PSC for transit-transfer passengers and higher concession revenue from the addition of a new ground and cargo service provider (see our previous report). Key risks to our call include a slowdown in travel to Thailand and heavier than expected capex if new airports in Chiang Mai and Phuket are approved by Cabinet.
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Malaysia Banking Improved fundamentals from a stronger economy
POSITIVE maintained BNM’s 1H24 Financial Stability Review (FSR) highlights the improved fundamentals of the banking system amid more robust economic activity this year. Business credit risk is improving while household debt-to-GDP has moderated further to 83.8% end-June 2024 from 84.2% end-Dec 2023. We maintain a POSITIVE on the sector with BUYs on AMMB, CIMB, PBK, RHB, HLBK and HLFG.
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| UOB KAYHIAN | UOB KAYHIAN |
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Shipping And Ports – China Weakening Global Trade Environment With Upside Risks For Freight Rates
The latest economic indicators pointed to a weakening global trade outlook, with both China and global manufacturing PMIs standing at sub-50 levels, and their new export order sub-indices sinking deeper in the contractionary territory. Ocean freight rate futures prices have rebounded lately amid escalating tensions in the Middle East, and the US East Coast port strike, though halted for now, remains a key uncertainty. Maintain MARKET WEIGHT. BUY OOIL, CSP and CMP. CSH is downgraded to HOLD.
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Hospitality REITs – Singapore Greater Influx Of Chinese Tourists, Lower Supply Of Hotel Rooms
Visitor arrivals recovered 13% yoy in July and 17% yoy in August, boosted by the pick-up in volume of Chinese tourists. Growth is supported by large-scale MICE events, new tourism attractions and muted supply of hotel rooms. The sector trades at an attractive 2025 distribution yield of 6.1% and low P/NAV of 0.74x. Maintain OVERWEIGHT. BUY CLAS (Target: S$1.38) for expansion in longer-stay properties. BUY CDREIT (Target: S$1.50) as it benefits the most from lower interest rates.
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• Thanks to China's new stimulus measures to boost its economy, Chinese and HK stocks have been roaring loudly. UOB KH has just put out its alpha picks for the Greater China markets.  • One of them is notable: Plover Bay Technologies, which boasts high gross margins (~55%), is asset light and is on a growth trajectory. A key aspect of its business is being an authorised technology provider of Starlink, which belongs to Elon Musk's SpaceX. Starlink is a satellite internet constellation designed to provide high-speed, low-latency broadband internet across the globe, particularly in remote and underserved areas. Starlink's network consists of thousands of small satellites in low Earth orbit, which allows it to offer reliable internet services. • So what does Plover Bay do? Among other things, through its brand Peplink, it creates devices and software that can combine multiple internet connections, including Starlink's, to make them faster and more reliable. This is especially useful for businesses and people on the move, like those on ships or in remote locations. (For more, see this investor's analysis -- and UOB KH's take below). |
Excerpts from UOB Kay Hian report
Analyst: Greater China Research Team
• The HSI and MSCI China surged 17.5% and 23.1% mom respectively in September, buoyed by the PBOC’s policy easing and supportive statements from the Politburo meeting. |
ACTION
• Add CATL (300750 CH) to our BUY list due to the strong growth in monthly EV battery shipments and drop in lithium carbonate prices which will lead to better 3Q24 earnings.
• Add Geely (175 HK) to our BUY list due to its upbeat monthly sales.
• Add Plover Bay (1523 HK) to our BUY list as its growth momentum has continued into 8M24, with revenue growth in July and August further accelerating from 28% yoy in 1H24, mainly driven by strong demand in the US and Australia.
• Take profit on COLI (688 HK), Desay (002920 CH) and KE Holdings (2423 HK).
• Cut losses on Li Auto (2015 HK) and Xpeng (9868 HK).
• Maintain BUY on AIA (1299 HK), Crystal (2232 HK), Galaxy (27 HK), Meituan (3690 HK), Ping An (2318 HK), Sunny Optical (2382 HK), Trip.com (9961 HK), Tencent (700 HK) and The United Lab (3933 HK).
| Plover Bay Technologies (1523 HK) (Analyst: Kate Luang) We held an update call with Plover Bay. Its solid growth momentum continued into 8M24 with revenue growth in July and August further accelerating from 28% yoy in 1H24, mainly driven by strong demand in the US and Australia. Management expects full-year 2024 revenue to grow by 25% yoy despite a relatively high base in 2H23. The company is positive on achieving a high gross margin in 2H24 (1H24: 55.4%), thanks to stable raw material costs and a favourable product mix. We expect Plover Bay’s full-year gross margin to reach 56.5% in 2024, vs 54.0% in 2023.  We are seeing increased deployment of Peplink routers in the maritime vertical. Following the deployment of Peplink routers on their cruise ships, Royal Caribbean Group also debuted Starlink Internet in communities in Alaska in late-August (where their cruise ships make stops at) so that passengers can remain online while onshore. We maintain BUY and raise target price to HK$6.10. We increase our 2024-26 revenue forecasts by 1%/1%/1% respectively to reflect stronger growth momentum, and raise our 2024-26 net profit forecasts by 8%/8%/9% respectively to factor in higher gross margins. We believe the 19% share price pullback since late-July provides windows to accumulate shares as the company is trading at attractive valuations of 11.2x 2025F PE and 7.8%/8.5% dividend yield in 2024-25 respectively. Catalyst: Further collaboration(s) with Starlink announced. Valuation: Trading at 11.8x one-year forward PE, which is slightly below its historical mean of 12.6x in 2018-24. |
Full report here.
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UOB KAYHIAN |
UOB KAYHIAN |
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STRATEGY – SINGAPORE Alpha Picks: Outperforming For Sep 24 And 3Q24
Our Alpha Picks portfolio outperformed in Sep 24, rising 5.4% mom on an equalweighted basis and beating the STI by 1.3ppt. On a quarterly basis, our portfolio also outperformed the STI by 0.3ppt for 3Q24. The outperformance in Sep 24 was driven by STM, SCI and GENS, while CSE and MINT underperformed. Our Alpha Picks portfolio has now outperformed the STI in 11 out of the past 12 months and six out of the past eight quarters.
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Mapletree Industrial Trust (MINT SP) Further Expansion In Japan With Potential For Redevelopment
MINT is acquiring an effective interest of 98.47% in a mixed-use facility in West Tokyo, Japan for ¥14.5b (S$129.8m). The property has the potential to be redeveloped into a multi-storey core & shell data centre with capacity for 30-40MW of IT workload at a cost of S$200m-300m. The redevelopment could enhance yield on cost to 5.5-6.0%. MINT provides a FY26 distribution yield of 5.6% (DCREIT: 5.9% and KDCREIT: 4.4%). Maintain BUY. Target price: S$3.05.
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CGS CIMB |
CGS CIMB |
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AIA Group Tailwinds continue to build
■ We now expect currency tailwinds for AIA’s FY25F VONB growth to be the strongest since FY11, given recent US$ weakness against Asian currencies. ■ AIA’s exposure to HK, mainland China and Thailand also sees its investment income benefitting from better-performing share markets within Asia in 3Q24. ■ We see AIA as a key beneficiary of returning global investor interest in HKlisted shares, which we think is one of the keys to its sustainable rerating. ■ Reiterate Add rating; we raise our TP to HK$111 on higher FY24F-26F EPS. AIA remains our top sector pick on a 12-month basis.
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ST Engineering Armed and ready for growth
■ New foreign ammunition contracts and larger defence contracts are possible in the coming months, while defence OPM should sustain at c.13%, we think. ■ MRO tailwinds remain intact, backed by optimistic commentary from peer AAR Corp and ongoing slow pace of new aircraft deliveries. ■ We continue to like STE as a rate cut beneficiary with healthy earnings tailwinds. Reiterate Add, with a higher TP of S$5.30 (20x CY25F P/E).
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| MAYBANK KIM ENG | MAYBANK KIM ENG |
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CapitaLand Ascott Trust (CLAS SP) Adding lyf to portfolio
EBITDA yield of 4.7%; maintain BUY CLAS is acquiring hotel-licensed lyf Funan Singapore for SGD263m, or an attractive SGD800k per key. The deal offers DPU accretion of 1.5%, assuming 50% of management fees in units. YTD, CLAS has divested SGD340m of SR and hotels in SG, Japan and Australia, at exit yields between 3.2-4.4%. Meanwhile, CLAS added SGD221.9m of student/rental housing in the US and Japan at NPI/EBITDA yields of 4-7% in 1H24. We like its execution in searching for higher yields. We raise our FY24-25E NPI forecasts 0.1-1.5% and lift our TP to SGD1.15 from SGD1.10 on a lower riskfree rate of 2.75%.
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Mapletree Industrial Trust (MINT SP) Revived animal spirits
Redevelopment opportunity; upgrade to BUY Upgrade to BUY from HOLD and increase our TP to SGD2.60 from SGD2.15, applying a lower risk-free rate of 2.75% (previous: 3%). MINT is acquiring a mixed-use industrial facility in Tokyo, Japan for JPY14.5b (~SGD127.8m). The freehold asset bodes redevelopment potential when the existing lease rolls off. We like the potential upside from the redevelopment potential, and an NPI yield of 4%, which offers downside protection. Factoring in topline contribution, we increase our forecasts by 0.2-0.5% for FY25-26E. Management is open to value-creation and a slightly more opportunistic risk-return profile. Supported by falling interest rates, its sponsor and divestment pipeline, we expect more acquisitions with a stable income stream and growth potential.
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