ANALYSTS SAY: Buy, Sell, Hold (30 May)

UOB KAYHIAN

Singapore Telecommunications (ST SP)
FY22: Earnings In Line; Building Momentum Into FY23

Singtel reported 5% yoy higher 2HFY22 core earnings of S$941m (-4% hoh), thanks to strong performances in Optus consumers and India. FY22 core earnings are in line with our estimates but below the street’s forecasts. Singtel is expected to fare well in FY23 with momentum in Optus consumers, higher prepaid and roaming with border reopening, NCS’s double-digit growth trajectory and smart capital recycling – S$3b of potential asset monetisation identified in the near term. BUY on weakness. Target price: S$2.90.

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CapitaLand Integrated Commercial Trust (CICT SP)
Office Gaining Momentum; Retail Recovering Gradually

CICT is in advanced negotiations for new leases to backfill vacant spaces at Capital Tower and CapitaSky, which could potentially improve occupancies by 18ppt and 3ppt respectively to 94% and 95.8%. New supply from IOI Central Boulevard Towers coming on stream in 4Q23 is likely to be largely pre-committed. Rent reversion for retail could remain weak due to changes in the tenant mix at some of its retail malls. CICT provides 2023 distribution yield of 5.4%. Maintain BUY. Target price: S$2.50.

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UOB KAYHIAN

UOB KAYHIAN

Keppel Pacific Oak US REIT (KORE SP)
Rise And Shine With Organic Growth From Magnet Cities

KORE benefits from the dispersion of tech jobs to Atlanta, Dallas, Denver and Orlando,
accounting for 34.4% of its AUM. Management guided positive rent reversion at midsingle-digit in 2022 driven by Seattle and Sacramento. Details on the redevelopment of multi-family units atop the existing car park at The Plaza Buildings will be finalised over the next two quarters. KORE provides an attractive distribution yield of 9.0% for 2022.
Maintain BUY. Target price: US$1.07.

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British American Tobacco (ROTH MK)
1Q22: Lull Due To Omicron Wave

BAT’s 1Q22 results disappointed expectations due to sluggish sales attributed to the Omicron wave amid a decline in illicit share as well. A bright spot was opex declining sharply as BAT adopts its new distribution model. We expect a swift recovery in sales following the resumption of economic activity. We continue to like BAT for its appealing dividend yield and nicotine vaping potential. Maintain BUY but with a lower target price of RM16.05 for the one-off Omicron impact. 

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IJM Corporation (IJM MK)
4QFY22: Poised For A Recovery Ahead

IJM’s FY22 performance was within expectations as the company registered a core net profit of RM126.1m (+42% qoq, +11% yoy) in 4QFY22. All core divisions rebounded in
4QFY22 given the easing of lockdowns. IJM is expected to see a more meaningful recovery this year on the full resumption of its businesses coupled with more new job wins from the rollout of infrastructure projects. Its RM4.2b outstanding orderbook will help support its outlook. Maintain HOLD with a target price of RM1.65.

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Unilever Indonesia (UNVR IJ)
Potential Margin Expansion And Higher Product Demand

UNVR could benefit from a decline in oil and plastic costs. Oil prices are expected to fall from US$144/bbl currently to US$101/bbl in Dec 22. Lower oil prices could translate to lower packaging costs. Ice cream demand could recover as schools are reopening and we could see a sizeable recovery in home care. In late-2H22, UNVR could benefit from a recovery in product demand and better margins. Maintain BUY with a new target price of Rp6,400 (from Rp5,000).

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