Singapore Telecommunications (ST SP) Singtel’s NEXT growth engine
NCS set to contribute a bigger slice of ST’s pie Recent NCS acquisitions have bolstered Singtel’s plan to seek out new regional businesses. Integrating digital, cloud and platform services (NCS NEXT) with existing capabilities should support higher margins. We continue to like Singtel’s ability to: 1) capitalise on regional leadership via exclusive tie-ups with private, public and associates’ businesses; 2) drive new growth engines; 3) unlock infrastructure asset value to drive growth. Reiterate BUY with SOTP-based TP of SGD2.98.
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Senheng New Retail Bhd Malaysia’s largest E&E retailer
■ We initiate coverage on Senheng, Malaysia’s largest consumer E&E retailer with 105 outlets nationwide, with an Add rating. ■ We project a net profit CAGR of 13% (FY21-24F), driven by: i) 18% growth in physical retail area, ii) steady SSSG, and iii) robust growth in online sales. ■ Our TP of RM1.00 is based on 17.4x CY23F P/E (a 20% discount to CGSCIMB’s consumer discretionary sector’s 5-year mean P/E of 21.8x).
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Banking – Singapore Step-up In Intensity Of Hawkishness
FOMC minutes and recent comments by Fed officials indicate that interest rate hikes are likely to be frontloaded in 2022, and quantitative tightening should commence in May 22. We expect the next two rate hikes to be 50bp each. The resilient labour market will help the US economy weather the tightened monetary policy and higher interest rates, which are positive for banks. BUY DBS (Target: S$39.55) and OCBC (Target: S$15.50) for their 2022 dividend yields of 4.1% and 4.6% respectively. Maintain OVERWEIGHT.
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We highlight key highlights from Hongkong Land’s (US$5.01, down 0.07) FY21 annual report that was just released: Hongkong Land ‘s performance remained resilient in 2021 despite the continued impact of the pandemic and related travel restrictions. Profi ts from the core business was in line with previous years, and retail rental income increased during this year, off set by lower office rents in HK. Increased residential sales in China resulted in higher contribution from the development properous business and good progress was made on replenishing the land bank, with 9 new projects secured in China and 3 in Singapore.
Capitalized at US$11.69bln, HKL currently trades at 12x forward PE and 0.33x PB, with a dividend yield of 4.4%. Consensus target price stands at US$6.18, representing a potential 23.4% upside from current share price. We continue to like HKL for its cheap valuations and steady recurring cash flows that will continue to sustain dividends. Share price is also supported by its share buyback programme which is only 54% completed and we think that further share buy backs will lend support and underpin its price performance amidst an uncertain and volatile market environment. The inflationary environment will also benefit their solid grade “A” assets. We thus maintain our “Accumulate” rating on HKL.
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