Singapore Airlines (SIA SP)
3QFY21: Qoq Improvement Supports Gradual Capacity Addition
While SIA’s 9MFY21 results were below the street’s estimates, it was above ours, and we are encouraged by the qoq improvement at operating and bottom-line, brought about by increased aircraft utilisation and firm yields. We believe that SIA’s careful strategy of adding capacity should lead to lower losses, provided cargo demand and yields remain firm. We now value SIA at 0.9x two years’ average forward book value and derive a target price of S$4.00. Suggested entry level: S$3.80. Upgrade to HOLD.
ISDN Holdings Ltd
Short-term positives priced in
■ Our small-cap alpha pick ISDN has reached our target price, based on our current earnings expectations. Downgrade to Hold.
■ Upside earnings risk could come from the mini-hydropower business, which we have not factored into our forecasts.
■ On risks, we note possible unrealised foreign exchange losses and uncollectable receivable risks while perusing its FY19 annual report.
Refreshing its beer IPO dreams
■ THBEV proposes to list its beer business (under BeerCo Limited) on the Main Board of the SGX, with a public offering of up to c.20% shares.
■ Purported valuation of US$10bn could re-rate the stock. Looking back at 2019, when news first emerged, the stock traded up to S$0.935/share.
■ Reiterate Add.
UG Healthcare Corp Ltd
Growing from strength to strength
■ 2QFY6/21 NP of S$32.3m (a 58-fold increase yoy) was above expectations, despite logistical disruptions that temporarily impacted sales volume.
■ We continue to see stronger quarters ahead as ASPs remain on an uptrend. UGHC could leverage on favourable industry trends to expand capacity.
■ Reiterate Add and TP of S$1.70. UGHC is trading at an undemanding valuation of 6.1x CY22F P/E (a 55% discount to its Malaysian peers).
Check out our compilation of Target Prices