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Singapore Economics Electronics Sustaining Manufacturing Growth; Expect 3Q GDP at +7.2%
IP Growth Eases in August Due to High Base for Pharma Manufacturing growth remained in the double-digits in August, powered by electronics, but eased to the slowest pace in four months, due to the decline in the volatile pharmaceuticals segment. Industrial production rose by +11.2% in August (vs. +16.4% in Jul), while IP exbiomed grew by +13.6% (vs. +6.7% in Jul). Manufacturing may contract in September given the higher base for pharma, which jumped to a record level last year (see Fig 3).
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Singapore Market Shaken and stirred
More combinations, privatizations & restructurings? Singapore has seen a flurry of M&A, restructurings and privatisations this year. Market valuations are unstretched and liquidity is ample. In this backdrop, we see four major catalysts that could propel more deals going forward: (a) pandemic aided acceleration of structural shifts that were already underway, (b) distressed business models, (c) integration of green business strategies and (d) government initiatives. Transactions are likely across multiple sectors, but we think GLCs, high growth SMIDs and latestage startups could lead the charge. Our screening identifies potential near-to-midterm candidates: AEM, AREIT, CIT, DBS, FPL, KEP, OLAM, ST, SGX, SMM, WIL (listed), and Carousell and Carro (private).
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PHILLIP SECURITIES |
CGS CIMB |
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StarHub Limited Removing potential disrupter at a price
SINGAPORE | TELECOMMUNICATIONS| UPDATE 27 September 2021 Acquiring a 50.1% stake in MyRepublic’s (MR) Singapore Broadband business for S$70.8mn. And extending a S$74.2mn 3-year loan to MR Holding company. The acquisition will further consolidate the broadband market into a tighter oligopoly. Synergies include network cost savings and cross-selling into MR’s higher ARPU customer base. We are neutral on the transaction. A large benefit is to consolidate or even remove a potential competitive threat in the marketplace. The acquisition is EPS accretive and valued at FYJun21 EV/EBITDA of 8.0x and 13.6x PE. Our NEUTRAL recommendation and estimates are unchanged pending completion of the transaction in December 2021.
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Vicplas International Ltd FY21 net profit grew 108% yoy to S$10.4m
■ Vicplas is a plastic injection moulding company focusing on constructionrelated piping and plastics for medical usage (devices and consumables). ■ On 24 Sep 2021, Vicplas reported its FY7/21 results with net profit rising 108% yoy to S$10.4m. ■ The share trades at a historical FY21 P/E of 13.2x with FY21 net gearing of 0.05x.
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