Frencken Group (FRKN SP)

3Q21: No Surprises In Business Update

Frencken’s 3Q21 earnings of S$14.8m (+10.7% yoy, -10.8% qoq) took 9M21 net profit to 77% of our full-year estimate. The business update presented no surprises, as revenue continued to be led by a positive momentum in the semiconductor segment, driving improved operating leverage. We expect the semiconductor segment to continue driving growth going forward, driven by the accelerating development of 5G technology. Maintain BUY and target price of S$2.62.

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City Developments

Qoq improvements across all segments

■ Outlook improving with better performance across residential and hospitality.

■ Commercial segment stable with slightly higher committed occupancy qoq.

■ Reiterate Add with an unchanged TP of S$8.97.

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CGS CIMB

PHILLIP SECURITIES

Sembcorp Industries

Sunny day at Tengeh Reservoir

■ We visited SCI’s 60MWp floating solar farm today, the largest in Singapore. This is part of its 390MWp of solar energy projects in Singapore (incl. WIP).

■ We like SCI’s execution on greening its assets so far. Decarbonisation of its conventional energy segment is a key catalyst.

■ SCI is a renewable energy proxy in Singapore, trading at an undemanding c.8x FY22F EV/EBITDA vs. recent Sunseap acquisition at 31x.

■ SCI is also among our top 3 mid-cap ESG picks. Reiterate Add and TP of S$2.51 (still based on 15x CY22F P/E, benchmarking Asian peers’ average).

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Keppel Corporation – Comparison of both offers for SPH

• Singapore Press Holdings (SPH SP, Non-rated) (SPH) and Cuscaden Peak (Cuscaden) have entered into an implementation agreement to privatise SPH via a scheme of arrangement, after Cuscaden raised its offer to $2.36-2.40 per share.
• We compared the two offers. Despite offering more certainty of deal completion and the shortest time to payout under Keppel’s offer, we believe SPH shareholders will likely go for Cuscaden’s offer as this provides a higher total consideration value and value certainty.
• Maintain BUY with unchanged SOTP TP of S$7.07. We valued the Group based on the four new segments unveiled during Vision 2030 to better reflect the Group’s reporting segments going forward. Our TP translate to about 1.0x FY22e book value, in-line with its 5-year average. Catalysts expected from SPH resolution and a successful resolution to its O&M unit.

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