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RHB |
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SATS On track for long recovery
Upgrade to HOLD, TP unchanged at S$2.64. We upgrade our view on SATS from negative to neutral as we do not see further downside on the stock on the back of Singapore coming out of the Circuit Breaker and allowing passengers to transit through Changi from 2 June. This is positive for SATS, and barring another widespread outbreak, places SATS on the path to earnings recovery in FY22F. However, the outlook for regional aviation remains muted as regional travelers remain cautious. Hence, we are now neutral but not positive. No change to our earnings forecasts and TP. Risks would be a second wave of COVID-19 infections regionally which would prevent regional travel from recovering and derail our earnings forecast.
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ComfortDelGro (CD SP) Known Negatives Are Priced In; Upgrade To BUY
Upgrade to BUY from Neutral, new SGD1.65 TP from SGD1.45, 15% upside with c.5% FY20F yield. ComfortDelGro has priced in the soft earnings for 2Q20F and its exclusion from the MSCI Singapore index. With the swift reopening of Singapore’s economy and additional cash flow support from the latest Fortitude Budget, 2H20 earnings could be better than Street’s estimate. Our FY20F profit is 17% above Street’s. With its 1- year forward P/E below the historical average, investors should start accumulating ahead of the expected strong rebound in FY21 earnings
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CGS CIMB |
UOB KAYHIAN |
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Avi-Tech Electronics Limited Burn-in testing specialist
■ We initiate coverage on Avi-Tech with an Add rating and TP of S$0.422 as we believe it is a proxy for the rising semiconductor content in automobiles. ■ Prospective dividend yields over FY20-22F of 6.49% are backed by strong free cash flow (limited capex) and a net cash balance sheet, in our view. ■ Accretive M&A are upside share price catalysts.
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Keppel Corp (KEP SP) A Vision For The Future
Last week, KEP unveiled its 10-year strategic plan entitled “Vision 2030”. In our view, the key highlights were: a) a greater emphasis on generating recurring earnings with a view towards the market rewarding the company with a higher multiple, b) keeping a focus on its asset-light strategy and utilising more third-party funding, and c) increasing efficiency of capital allocation among its business units. Maintain BUY. Target price: S$7.15.
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