ANALYSTS SAY: Buy, Sell, Hold (26 May)

UOB KAYHIAN

UMS Holdings (UMSH SP)
1Q22: Continued Strength In Semiconductor Demand

1Q22 net profit of S$19.4m (+26% yoy, +240% qoq) was led by continued strength in semiconductor demand, as well as consolidation of sales from JEP. First interim DPS of 1 S cent was maintained. The roadmap remains bright with clear revenue visibility stemming from UMS’ key client’s orderbook and positive outlook, while signs of a revival in the aerospace industry are starting to show. Maintain BUY with target price of
S$1.45.

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CDL Hospitality Trusts (CDREIT SP)
Happy Days Are Back With More Holidays And Business Trips

We see continued recovery for CDREIT’s hotels in 2H22. Singapore reopened its international borders in April and will benefit from the Singapore Grand Prix and largescale MICE events in 2H22. Maldives should see sustained recovery from influx of holidaymakers. In the UK, Hilton Cambridge benefits from recovery of business travel while The Lowry Hotel is popular with sports enthusiasts. Newly-acquired Hotel Brooklyn started to contribute in 1Q22. Maintain BUY. Target price: S$1.57. 

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UOB KAYHIAN

UOB KAYHIAN

Axiata (AXIATA MK)
1Q22: In Line; Geopolitical Risk A Near-term Threat

Axiata’s 1Q22 core earnings of RM370m represent a 69% yoy growth on the strong performances of Celcom, Robi and edotco. 1Q22 earnings account for 30% of our full year forecast and we deem the results to be within expectations as we expect a weaker 2Q22 amid the ongoing geopolitical tension in Sri Lanka and strengthening US dollar.
Maintain HOLD with a lowered fair value of RM3.50 as we downgrade Dialog’s and NCell’s fair value amid rising country risk premium.

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Bumi Armada (BAB MK)
1Q22: Mixed Results; Still A Beneficiary Of Energy Transition

1Q22 results are mixed. BAB benefitted from a sharp reduction in depreciation as FPSO Armada Claire is earmarked for disposal. Excluding this, EBITDA is weaker yoy, reflecting higher costs. Our forecast revision reflects its readiness to capture opportunities on energy security (more FPSO demand) and energy transition (more gas demand). This may be a bumpy ride ahead, but most of the risks are priced in. Maintain BUY with a higher target price of RM0.57. 

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NetLink NBN Trust
Stable core operations

• IMDA (Infocomm Media Development Authority) pricing review is expected to be completed by early 2023
• Steady fibre connection growth; still seeking inorganic growth
• Fair value (FV) of SGD1.07

Investment thesis
NetLink NBN Trust’s (NetLink) FY22 (ending March 2022) revenue grew 2.5% year-on-year (YoY) to SGD377.6m, which was broadly within expectations. Profit after tax declined 3.7% YoY to SGD91.3m, due mainly to a remeasurement loss during the year. FY22 dividend per unit (DPU) grew 1.0% YoY to 5.13 Singapore cents, which is 0.8% above our expectations. Management has noted that the regulatory review of NetLink’s services (including prices) offered under its Interconnection Offer with the IMDA is expected to be completed by early 2023. On the improvement in residential and nonresidential connections, we understand that there has been a positive spillover effect from the pick-up in construction activities. However, it would be challenging to extrapolate this observation into longerterm trends. On possible mergers and acquisitions (M&A), management remains patient in looking for appropriate opportunities, and will also take into account the more volatile interest rate and macro
environment going forward. Management also expects CAPEX for FY23 to be in the ballpark of SGD70m (not too dissimilar from the regular run-rate), excluding the CAPEX required for the Central Office that Netlink is going to build. In our view, we acknowledge that the regulatory review remains the key overhang for the
name, but we believe that Netlink’s robust balance sheet, attractive yield, and relatively resilient business model keeps us positive on the name, especially given current market conditions. Following adjustments and rolling forward our estimates, our FV moves up slightly
from SGD1.06 to SGD1.07.

TDCX Inc
Expect a stronger 2H

■ 1Q22 core net profit of S$30m (+35% yoy) was in line with expectations.
TDCX saw accelerated client additions during the period.
■ Macro uncertainties temporarily delayed clients’ project commitments. Midpoint of FY22F revenue guidance lowered to +19% yoy (from +25%).
■ Reiterate Add with lower TP of US$18 (14.6x EV/EBITDA). We expect a stronger 2H22 with further recovery in travel and hospitality segments.

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