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Singapore Exchange Ltd (SGX SP) Platform play
Resilient platform poised to deliver amidst volatility SGX’s 1H21 PAT came ahead of Street/MKE expectations supported by contributions from recent acquisitions and stronger cash equities volumes. Derivatives saw limited disruption from the departure of key contracts pointing to the resilience of its multi-asset platform. Higher contract pricing, strong equity market velocity and new product launches should continue to support earnings momentum and keep dividend visibility high, in our view. We raise our TP to SGD11.48 from SGD10.77. Maintain BUY.
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Frasers Centrepoint Trust (FCT SP) Adding To Resilient Space
Resilient occupancies; maintain BUY FCT’s occupancy for its enlarged portfolio was resilient at 96.4% in 1Q21, following the ARF acquisition, with broad-based and better-thanexpected improvement across its malls. Stable operating metrics suggests suburban malls will lead the retail sector recovery in Singapore’s phase 3 reopening. While shopper traffic stays at c.30% below pre-Covid levels, tenant sales recovery has gained traction and strengthened DPU visibility. Our forecasts are unchanged. The ARF properties have reinforced its market share in the more resilient suburban malls space. Our DDM-based TP stays at SGD2.90 (COE: 6.2%, LTG: 2.0%). Reiterate BUY.
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UOB KAYHIAN |
UOB KAYHIAN |
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Banking – Singapore 4Q20 Results Preview: NIM Bottomed; Lower Credit Costs Propel Earnings
4Q is usually a seasonal lull. We expect DBS and OCBC to report net profits of S$1,002m (-33.5% yoy and -22.7% qoq) and S$882m (-29.1% yoy and -14.3% qoq) respectively for 4Q20. We expect the stock market to take cue from the direction of asset quality and credit costs. In both respects, we prefer OCBC (Target: S$14.65), which provides dividend yields of 4.7% and 5.3% respectively for 2021 and 2022. We downgrade DBS (Target: S$29.45) to HOLD. Maintain OVERWEIGHT.
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Offshore Marine – Singapore Equilibrium Delayed
COVID-19 has undoubtedly dented the recovery prospects of both the O&G and the O&M industries. In our view, the sector outlook for 2021 is not bright: two in five rigs in aggregate remain out of work, day rates and utilisation levels for operating rigs remain depressed, and O&G industry capex is forecast to recover slowly. Maintain MARKET WEIGHT on the sector with YZJ and KEP as our top picks.
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