ANALYSTS SAY: Buy, Sell, Hold (28 Sept)

United Overseas Bank (UOB SP)

ASEAN-centric With Least Exposure To Greater China

UOB has the least exposure to Greater China among the three Singapore banks at 16.1% of total loans. 47% of its exposure to Mainland China is via the banking sector, primarily systemically-important domestic and policy banks through discounted letters of credit. Its exposure to Hong Kong is predominantly wholesale banking for blue chip companies. Loan growth should pick up in 2H21 given the strong pipeline and loanrelated fees are on track to hit a new record for the full year in 2021.

Read More..

LHN Limited

A diversified real estate management service provider

• LHN is a real estate management service group which specialises in space optimisation. The company also provide facilities management and logistics services, which complements its space optimisation business.

• Catalysts. A solid FY22 revenue growth is expected from the space optimization business, given that 4 residential properties are expected to commence operations. Revenue and earnings drivers include reopening of borders and positive momentum of co-living trends. Meanwhile, the facilities management segment is expected to grow in tandem with the space optimization business, coupled with recurring dormitory management income. Finally, the logistics management segment is expected to grow in line with robust shipping activity.

• We initiate with an OUTPERFORM recommendation and TP of S$0.49, based on 6.0x FY22F P/E.

Read More ...

LIM & TAN

LIM & TAN

Marketnode, a Singapore Exchange / SGX ($10.10, up 0.06) and Temasek digital asset joint venture, today announced its partnership with Barclays, BNP Paribas, BNY Mellon, Citi, Deutsche Bank, HSBC, Orient Securities International, Standard Chartered, Societe Generale and UOB, ahead of its upcoming product launches focused on digital issuance services, ESG bond data and digital asset depository infrastructure.

These components will play a key role in the buildout of an end-to-end DLT-enabled fixed income infrastructure. Beyond early adopt on of Marketnode’s products, these ten partner institutions will work closely with Marketnode to accelerate usage of its plaƞ orm, provide market input toward sits product development, co-create DLT solutions and jointly explore product expansion beyond fixed income.

Marketnode’s fixed income issuer services plaƞ orm is slated to launch in Q4 2021 and will provide issuers, law firms and banks with products and solutions such as documentas on streamlining, investor engagement tools, ESG reporting and market access mechanisms, all powered by data analysis. In addition to its existing strategic collaboration with Covalent Capital, Marketnode will also be partnering with RootAnt Global, a Singapore-based fintech, and SETL, a UK-based blockchain solution plaƞ orm to build out its fixed income and multi-asset end-to-end infrastructure.

Since Marketnode’s partnership announcement with Covalent Capital in February this year, both parties have launched integrated off erings such as auto-ISIN generation and digital bond straight through processing (STP). Marketnode will continue to ideate with partners and the industry to jointly create applications that bring greater efficiency to capital markets.

Lee Beng Hong, Head of Fixed Income, Currencies and Commodities (FICC), SGX, said, “We continue to embrace the paradigm shift that the financial industry is undergoing with the emergence of new technologies. By collaborating with banking and technology partners, we are creating network eff ects and building scale and capability that can be applied cross-assets within a single plaƞ orm, for the benefit of banks, issuers and investors. We welcome all market participants to join Marketnode in playing a role to accelerate the digital transformation of capital markets.”

Pradyumna Agrawal, Managing Director, Blockchain@Temasek, added, “The participation of these banks onto the Marketnode platform is a significant milestone. It further validates the market for end-to-end infrastructure, and services for digital assets. Their contributions towards enhancing the platform’s offerings and capabilities will be invaluable. We look forward to welcoming more market participants as increased industry involvement will foster scale, robustness and spur greater capital markets infrastructure innovation.”

The latest tie-up between Marketnode with 10 reputable and re-known financial institutions will help to accelerate the usage of its platform and help to foster scale and integrity of its services which focus on digital issuance services, ESG bond data and digital asset depository infrastructure. This will in turn help SGX accelerate its digitalization initiatives, in line with the push of Singapore government’s digitization initiatives.

After having fallen sharply from the $12.04 level in early August’21, SGX is currently trading at $10.10, valuing the company at 23.8x PE & 3.2% dividend yield. In comparison, HK Exchange is trading at 43x PE and Australian Stock Exchange at 33x PE, making SGX relatively attractive and we maintain an “Accumulate” rating on SGX. Bloomberg consensus target price is $10.80, implying upside potential of 6%. 

Sunright (S$0.495, up 0.5 cents) announced its FY21 results which saw revenue inch up 1% to S$111.4mln while net profit was down 22% to S$1.3mln.

For 2H21, turnover was up 5% yoy to S$52.7mln while net earnings crashed 98% yoy to S$98k.

The Group noted that component prices have risen and lead times lengthened, with the re-imposition of lockdown measures to curb the more transmissible Delta variant currently experienced in Asia.

It remains challenging to engage and perform equipment qualifications under such conditions, as the Group’s customers’ priority is to resolve supply and mass manufacturing boƩ lenecks. Accordingly, notwithstanding that growth is projected for the industry, the supply disruption is expected to exert pressure on the Group’s businesses.

Mr. Sam Lim, Executive Chairman & Chief Executive Offcer commented, “As we entered FY2021, it seemed more challenging than the last. It continued to be enveloped by COVID-19 pandemic with massive systemic disruptions for businesses world-wide. The Group has now achieved a high vaccination rate of over 90% aggregated in our various factories, ready to support the growth momentum in 2022.”

He explained, “Our customers faced production interruptions and our services were frequently disrupted by work restrictions. The global semiconductor shortages also affected the supply chain of certain components and some shipments of our products to customers were delayed. Nevertheless, we overcame the severe constraints.” He said, “We maintained our sales with a slightly lowered boƩ om line.”

Mr. Lim added, “Moving forward, we remain optimistic. For the first time, the worldwide semiconductor revenue is projected to surpass the US$500 billion mark this year. Our product porƞ olio serves the fast growing segments - Cloud computing, communication and automotive. Our innovative test and burn-in solutions for semiconductors used in these applications will bring exciting opportunities for Sunright to ride on this wave.”

At $0.495, market cap of Sunright is $60.8mln, FY21 P/E is 46.8x, current P/B is 0.7x and FY21 dividend yield is 0.6%.