ANALYSTS SAY: Buy, Sell, Hold (7 June)

CGS CIMB

Yangzijiang Financial Holdings
A force to be reckoned with

■ We like YZJFH for its generous 40% dividend payout and yield of 4.1%-6.24% in FY22F-FY23F with consistent returns of funds of c.11%.
■ If we include its debt investments that are maturing by end-2022F as cash, its cash balance could amount to c.S$1.8bn or c.85% of its current market cap.
■ We initiate coverage with an Add rating and TP of S$0.74, based on blended valuations of 0.6x CY23F P/BV (70%) and 9x CY23F P/E (30%).

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ST Engineering
NDR takeaways: Growth and yield

■ We hosted STE’s management on an NDR in Europe. We think STE is in a sweet growth spot, with tailwinds from smart spending and aviation recovery.
■ Reiterate Add. STE is its yield and growth profile by FY23F, harvesting sizeable M&A and investments made during and pre-Covid.
■ FAQs by investors: 1) aerospace recovery, 2) smart city opportunities, 3) defense spending and impact on STE, and 4) supply chain management
■ Catalyst: quicker global reopening. Downside risks: global recession.

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UOB KAYHIAN

CGS CIMB

Valuetronics (VALUE SP)
FY22: Above Expectations, But Remains Cautious On Its Outlook

VALUE’s FY22 net profit of HK$114m (-39% yoy/+1% hoh) was above our expectations, forming 115% of our full-year estimate, due to a lower-than-expected revenue decline.
VALUE's outlook remains cautious as it expects the ripple effect of the supply chain bottlenecks to last beyond 2022. Other uncertainties include the COVID-19 pandemic, the Russia-Ukraine conflict and US-China trade tensions. We raise our FY23 EPS by 8%. Maintain HOLD and target price of S$0.52.

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Fraser & Neave Holdings
Privatisation of Cocoaland at RM1.50/share

■ F&N plans to acquire the remaining 72.3% stake in Malaysian confectionery maker Cocoaland Holdings (CHB) for RM1.50/share in a bid to take it private.
■ The RM488m consideration, to be funded via bank borrowings, values CHB at 27.7x average 3-year P/E (CY19-21, ex-cash of RM80.4m).
■ While we were surprised by this proposed deal, we see potential synergies which could lead to earnings accretion of 0.7-2.0% for F&N’s CY23-24F EPS.

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Malaysia Banking
1Q22 results round-up

There is upside potential to forecasts
The narrative is unchanged following the 1Q22 results season: a subdued 2022, but with a positive outlook into 2023. There is upside potential to our forecasts from a) margin expansion if the OPR continues to rise and b) lower credit costs as pre-emptive provisions are written back. Moreover, dividend yields are decent. POSITIVE maintained on the sector, with BUYs on HLBK, RHB, AMMB, ABMB and HLFG.

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REITs ‒ Malaysia
Sector Remains Attractive; Accumulate On Weakness

The sector has outperformed the FBMKLCI ytd (+5% vs -1.9%). With 1Q22 recording encouraging results, we expect the sector to continue to be resilient and fully recover back to pre-pandemic levels in 2023. Office REITs offer higher stable yields,
followed by retail REITs, which will be boosted by the earnings recovery especially when more international tourists come in. Maintain OVERWEIGHT. Top picks: Sunway REIT, IGB REIT and Sentral REIT.

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