| CGS CIMB |
UOB KAYHIAN |
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China Aviation Oil Likely a strong 2H23F showing
■ We expect CAO to report a 2H23F net profit of US$26m (+88% yoy), driven by increased trading activities and rebounding associate profits. ■ For FY24F, we forecast EPS growth of 57% yoy, driven by a further recovery in China’s outbound flight volumes to 80% of 2019 levels by end-2024F. ■ Reiterate Add at an unchanged TP of S$1.14, still pegged to 10x FY24F P/E (FY10-19 average). Current valuation is attractive at 8x FY24F P/E.
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ComfortDelGro Corporation (CD SP) Riding Strong Into 2024
CD’s taxi commission rate has been raised from 5% to 7% from 1 Jan 24, largely in line with our expectations. However, CD has also perpetuated its 10% taxi rental rebates from 2024 onwards which was a slight negative surprise. SBST’s Seletar bus package has been put up for tender and we expect it be retained given SBST’s incumbency advantage. With CD’s decent 4.2% dividend yield, we maintain BUY with a slightly lower target price of S$1.66 (S$1.69 previously).
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LIM & TAN |
MAYBANK KIM ENG |
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According to Bloomberg Singapore banks’ mortgages may end 2024 with flat to low-single-digit growth. The lenders will likely be selective in pricing to defend market share despite mortgages’ good risk-return profile. Defaults are low with DBS’s ($32.51, down 0.40) mortgages the least risky. Demand for homes looks healthy due to their inflationhedging ability and positive supply-demand dynamics. Singapore and Hong Kong house prices could continue to diverge with further interestrate hikes later this year and next. Singapore’s home-price growth might moderate, while Hong Kong’s could soon hit a five-year low. Fed rate hikes are set to push mortgage payments in Hong Kong 48% higher from mid-2022. On the other hand, home-loan losses could reach S$1-2 billion if a recession hits Singapore. Notwithstanding the tougher macro-economic conditions, expected lower interest rate environment (where Fed expects 3 rate cuts and market consensus expects 6 rate cuts), tepid loans growth conditions and more intensive competition for deposits, we nevertheless agree with Bloomberg analysis that Singapore banks on the whole will still be expected to report in-line FY23 results and resilient FY24 outlook. We believe that given their strong capital base and resilient asset performance and earnings in FY24, we would use weakness to “Add” more DBS, UOB and OCBC. Sector valuations remain attractive at 8-9x PE, 5-6% yields and 1-1.4x book valuations. We expect UOB to dish out a minimum of 85 cents final FY24 dividend versus last year’s 75 cents, OCBC to dish out more than last year’s 40 cents final dividend and DBS to provide attractive 48 cents final div versus 42 cents last year and also another special div this year (last year’s special was 50 cents/share). Maintain “ADD” DBS, UOB and OCBC.
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Genting Malaysia (GENM MK) Another unsavoury RPT but room for more narrowing
Maintain BUY call with higher MYR3.03 DCF-TP (+3%) To be sure, we do not look kindly on the most recent related party transaction (RPT) involving Empire Resorts (Empire). That said, it does appear to us that room for more RPTs involving Empire is narrowing. We cut our earnings estimates by c.MYR40m p.a., narrow the discount to our DCF-TP to 10% from 15% and raise our DCF-TP to MYR3.03 from MYR2.93. Investors should BUY GENM for its potential to win a downstate commercial casino license that may add MYR0.56 to our DCF-TP (link).
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| MAYBANK KIM ENG | DBS RESEARCH |
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Malaysia Oil & Gas 2024 Outlook: Buoyant but volatile
Maintain POSITIVE on Malaysia O&G Sector Our general thesis on the Malaysia Oil & Gas sector has not changed much since our previous report. As EIA has forecasted a record-high demand for oil in 2024-2025E, we think that the elevated crude oil price environment will be here to stay in the medium term. We maintain our POSITIVE stance on the sector with an in-house Brent Oil ASP assumption of USD80/bbl for 2024E. Top sector BUYs are Yinson, Icon Offshore, Velesto and Wasco.
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