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UOB KAYHIAN |
UOB KAYHIAN |
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STRATEGY – SINGAPORE Alpha Picks: Adding RSTON, UMSH, SIE, CICT And Removing CVL, VMS, LREIT
Driven by a strong performance from the banks sector, the STI was up 1.0% mom in Feb 25, beating our Alpha Picks portfolio on an equal-weighted basis which fell 3.9% mom. Our Alpha Picks portfolio performed slightly better on a market cap-weighted basis, falling 3.6% mom, with two stocks in particular weighing on the performance.
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REITs – Singapore S-REITs Monthly Update (Feb 25)
While trade conflicts and tariffs remain a threat, the recent series of weak economic numbers and efforts to rein in fiscal spending have led to lower US government bond yields. Many blue-chip S-REITs have already corrected and are trading at attractive yields of 6-7%. Maintain OVERWEIGHT. BUY retail REIT CICT (Target: S$2.37), data centre REIT DCREIT (Target: US$0.88) and healthcare REIT PREIT (Target: S$4.85). We also like CLAS (Target: S$1.38) and KORE (Target: US$0.33).
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UOB KAYHIAN |
UOB KAYHIAN |
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First Resources (FR SP) FY24: Within Expectations; Production Growth Likely To Continue In 2025
FR reported FY24 core net profit of US$229m (+56% yoy) which met our expectations but exceeded the street’s, at 104%/113% of respective full-year forecasts. 4Q24 earnings rose 33% qoq, driven by higher ASPs, while production continued to grow on a yoy basis. Management anticipates continued nucleus FFB growth of 5% yoy in 2025. Maintain BUY with a higher target price of S$1.75.
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UMS Integration (UMSH SP) 2024: Earnings In Line With Expectations; Expect Ramp-up For New Customer
UMS’ 2024 earnings of S$41m (-32% yoy) are in line with expectations. The earnings decline was due to weaker global chip demand. UMS has started volume production for its new key customer and expects an improvement in delivery, supported by a strong order flow as production ramps up. UMS expects significant revenue growth from the new customer and better group net margin from lower start-up costs. Upgrade to BUY with a 27% higher target price of S$1.21.
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| MAYBANK KIM ENG | MAYBANK KIM ENG |
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UMS Integration (UMSH SP) Earnings bottoms; U/G to BUY
QoQ improvement likely; raising TP to SGD1.16 U/G to BUY from HOLD as its outlook is improving. UMS’s FY24 PATMI of SGD40.6m was slightly below our and consensus estimates. UMS is still facing labour shortages, causing ramp-up of orders to remain challenging. It’s expecting SGD30m of additional orders in FY25E from its new customer and we expect execution to improve as the learning curve was mostly completed in FY24. We lower our FY24/25E PATMI by 9.2% and 7.9%, and roll forward our TP valuation to 14x blended FY25/26E, which results in a higher TP of SGD1.16 from SGD1.03. Management expects QoQ improvement hence we think earnings have bottomed.
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Sembcorp Industries (SCI SP) Staying the course
Resilient performance; gas business poised to grow SCI reported 2H PATMI of SGD471m, -13% HoH/+14% YoY. FY24 PATMI of SGD1.011b grew 7% YoY and PATMI from continuing operations of SGD1.02b was unchanged YoY. Higher earnings in gas and related services and integrated urban solutions led the YoY growth for 2H. On the back of earnings visibility, SCI raised its full year dividend to 23c (FY23 13c). SCI is now guiding for a 5% earnings CAGR for its gas business vs. earlier guidance of a decline. We raise our FY25-26 earnings by 6-11% and maintain BUY. Our target price rises from SGD6.2 to SGD7.1.
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