ANALYSTS SAY: Buy, Sell, Hold (1 June)

UOB KAYHIAN

REITs – Singapore
S-REITs Bi-Weekly Update (16-30 May 22)

It is heartening to hear that Beijing and Shanghai plan to relax COVID-19-related controls after the drop in new COVID-19 cases. The Russia-Ukraine war, however, remains in a protracted stalemate. Domestically, consumption is normalising and more employees are working from their offices. Pent-up demand is seen in the surge of inbound leisure and business travellers. BUY ART (Target: S$1.32), FCT (Target: S$2.96), FEHT (Target: S$0.82) and LREIT (Target: S$1.01). Maintain OVERWEIGHT.

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SATS (SATS SP)
FY22: Below Expectations; Cost Pressure Weighing On Near-term Performance

SATS’ FY22 revenue of S$1,177m and core net loss of S$8.5m were below our and consensus expectations. Core net losses excluding government reliefs widened qoq, as SATS’ revenue recovery failed to keep pace with its operating cost increase. We expect cost pressure from labour and food ingredients to continue to weigh on SATS’ financial performance in the near term. We cut FY23/24 core net profit forecasts by 54%/15% respectively. Maintain BUY with a lower DCF-based target price of S$4.75.

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MAYBANK KIM ENG

DBS VICKERS

AMMB Holdings (AMM MK)
4QFY22 results supported by credit cost writeback

BUY maintained, TP raised to MYR4.40
AMMB’s FY22 results were above expectations, mainly because of the write-back of management overlays in 4QFY22. Our FY23-25E net profit forecasts are raised by 3-9% but we continue to be prudent in our provisioning assumptions. As such, our FY23E ROE of 8% continues to lag management’s target of 9.3-10%. We maintain a BUY on AMMB with a higher TP of MYR4.40 (from MYR4.05), pegged to a CY23 PBV of 0.7x (CY23E ROE: 8%).

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Oil & Gas – Malaysia
Petronas 1Q22: Profit And Cash Benefit From Higher O&G Prices

Petronas’ cash flow benefitted from higher O&G prices and disposal gains, which offset production issues. While Petronas expects capex to recover and reflect 2019 levels, the sector’s valuation remains a laggard to the oil price uptrend. A key hurdle is the uncertainty of further capex ramp-up, which can improve once high-level issues are concluded, and this should benefit the local industry. We maintain MARKET WEIGHT on the sector, though value has emerged for certain stocks.

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CIMB Group (CIMB MK)
1Q22: Boosted By Lumpy Writeback

CIMB reported 1Q22 earnings that were above our estimates due to provision writebacks. The group has also delivered a positive operating JAWS qoq on solid operating cost discipline and stable NIM. Despite our earnings adjustment, we have left our target price largely unchanged as we factor in a higher COE to account for rising risk aversion on higher beta banking stocks. Maintain BUY and target price of RM6.30 (0.96x 2022/23F P/B, 9.2% ROE). 

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