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CGS INTERNATIONAL |
CGS INTERNATIONAL |
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Farm Fresh Berhad New growth drivers and better margins
■ We reiterate our Hold call on Farm Fresh (FFB), albeit with a higher GGMderived TP of RM2.82 following a review of estimates post-2QFY3/26 results. ■ Entry into Cambodia, new ice cream products with wider distribution, and higher-than-expected GP margins drive our FY26-28F CNP upgrades. ■ Despite higher CNP estimates, we see FFB’s 29.2x CY27F P/E as reflective of the improved earnings trajectory.
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Eastroc Beverage Seeking a HK listing
■ Eastroc Beverage is one of China’s leading functional-drink companies and is rapidly evolving into a diversified national beverage group. ■ According to Frost & Sullivan, functional beverages are the fastest-growing category within China’s beverage market, delivering 8.3% retail sales CAGR over 2019-24. ■ Eastroc is entering a multi-year international expansion cycle, with early success in Southeast Asia and the Middle East. ■ Eastroc plans to issue up to 66.446m H-shares, representing approximately 11.3% of total A+H share capital under the maximum issuance scenario. ■ Haitian/Anjoy’s H-share offer price was around a 17-20%/~21% discount to its Ashare closing prices in Shanghai before listing.
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MAYBANK KIM ENG |
LIM & TAN |
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Sembcorp Industries (SCI SP) Diversifying Down Under
Accretive purchase, but higher gearing and emissions SCI announced a proposed acquisition of Alinta Energy, one of Australia’s leading integrated energy companies, for an enterprise value of AUD6.5b. The deal will enable a strategic entry into an AAA-rated country with aligned transition policies, offer a captive customer base, in-place generating capacity across a diverse energy mix, and provide access to a large pipeline of renewable and firming projects. The debt-funded deal will be high single-digit earnings-accretive. Debt metrics will worsen but stay within management's comfort range, and transition targets will be pushed back. We lower our estimates by c.10% for FY25 and FY26 and our SOTP-based TP to SGD5.65. We maintain HOLD.
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Keppel Ltd.’s Connectivity Division (Keppel) has agreed to sell to Keppel DC REIT ($2.20, down 4 cts) the remaining 10% interest in Keppel DC Singapore 3 (KDC SGP 3) and 1% interest in Keppel DC Singapore 4 (KDC SGP 4) for a total cash consideration of $50.5 million. Following the completion of the transactions, which are expected to take place by 1Q 2026, Keppel DC REIT will hold 100% interests in the two data centres. Keppel DC REIT’s market cap stands at S$5.4bln and currently trades at 1.4x PB, with a dividend yield of 4.7%. Consensus target price stands at S$2.61, representing 18.6% upside from current share price. The acquisitions are expected to be DPU-accretive by about 0.8% and will be funded by part proceeds of the recent preferential offering (S$2.24/ unit). Given the robust outlook for data centres, but with its lower yield relative to other data-centre peers we would look to “Accumulate on Weakness” for Keppel DC REIT. |
| LIM & TAN | |
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CapitaLand Integrated Commercial Trust / CICT ($2.33, up 0.01) is pleased to announce that the consortium which includes CICT has submitted the highest bid of approximately $1.5 billion ($1,179 per square foot per plot ratio) for the tender of a mixed-use commercial and residential site at Hougang Central (the “Joint Development”), which closed today. The site is a 99-year leasehold residential and commercial plot that spans a total site area of 504,820 square feet. The consortium comprises (i) a wholly owned sub-trust of CICT, which will hold the commercial component in the development (the “Commercial Trust”), and (ii) another entity whose shareholders comprise CapitaLand Group Pte. Ltd. (or its wholly owned subsidiary) (“CLG”) and a third-party shareholder, being a UOL ($8.45, unchanged) consortium, which will hold the residential component in the development (the “Residential SPV”).
Conclusions and Recommendations Historically, all major/mega mixed used developments in Singapore have seen tremendous success in terms of take-up rates for both the residential units as well as commercial units as has been seen for Bedok Residences and Bedok Mall by the Capitaland Group of companies and Northpoint City and Northpoint residences by the Frasers Group of companies and earlier by Lee Kim Tah for Jurong point shopping centre and Jurong point residences. This likely reflects the strong demand for both residence and commercial units due to the integrated nature of the mega mixed used developments which sits at key transport nodes and the provision of key essential services which will reinforce demand for both residents and commercial units located at the developments. We are thus constructive and upbeat by the latest announcement by CICT and UOL and we thus maintain our “Accumulate” ratings for both CICT and UOL.
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