ANALYSTS SAY: Buy, Sell, Hold (8 June)

UOB KAYHIAN

Singapore Exchange (SGX SP)
Strong Monthly Performance As Trading Volatility Remains Elevated

In Apr 22, SGX saw sustained growth in DDAV as trading volumes for both equity-linked and forex derivatives rose, driven by uncertainty caused by the Ukraine-Russia conflict.
SDAV continued its downtrend while commodity volumes normalised from recent monthly highs. Upcoming interest rate hikes are expected to suppress SDAV while boosting interest income. In our view, SGX remains fairly valued at current price levels, with limited upside. Maintain HOLD with an unchanged target price of S$9.33.

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Dialog Group (DLG MK)
To Acquire First Overseas Upstream O&G Assets

DLG plans to purchase an onshore concession in Thailand for US$38.7m. Based on net 2P reserves of 2.3m bbl, the deal implies EV/bbl of US$16.80-18, in line with current peer valuations. Although it can potentially benefit from high prices and boost DLG’s income by 10%, its SOTP accretion is small, as the M&A is being done on a late life assets during high oil prices. We are overall neutral, but look forward to other catalysts (EPCC and storage recovery). Retain BUY with a RM3.00 target price.

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LIM & TAN RESEARCH

UOB KAYHIAN

Since its mainboard listing on 28 April ’22, YZJFH share price has been
tumultuous, plunging from S$0.69 at open to a low of S$0.39 on 19 May.
Selling pressure came from shareholders who are invested only for the
shipbuilding business, as well as the removal of YZJFH from the STI Index.
Subsequently, share price has recovered to S$0.525 as of today, after
the company announced that they will be holding an EGM on 8 June ’22
for shareholders to approve a new share buy-back mandate to allow the
company to buy up to 10% of its outstanding shares, as well as an upward
revision in FY22, FY23 and FY24 dividend pay-out ratio from a minimum
of 30% to 40%.

Notwithstanding the 36% recovery in share price from its nadir of
39 cents, we believe that there is still more value to be uncovered/
discovered given its

1) attractive valuations (FY21 6.3x price earnings ratio, 0.49x price to book),
2) high quality debt investment portfolio, after having left the most problematic loans in YZJ Shipbuilding books,
3) revised dividend pay-out policy for FY22, FY23 and FY24 from a minimum of 30% to 40% translating to an attractive dividend yield of close to 5%,
4) inclusion in the CPF Investment Scheme, and
5) board of directors’ insider purchases
between S$0.48 – S$0.575.

IT Hardware – China
Handset Value Chain – Visibility Still Lacking, Sequential Recovery From Low Base

Our channel checks show that there are no signs of a meaningful recovery in 3Q22 as shipments will likely remain sluggish and spec upgrades are muted. We are also seeing intensifying competition in Android HCM market which is pressuring ASP and margins.
Nevertheless, iPhone supply chain will remain the outperformer given intact spec upgrades and share gains. We cut our 2022 global/China smartphone forecast accordingly to -4.9%/-12.0%. Maintain MARKET WEIGHT. 

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Kuaishou Technology (1024 HK)
Unique Trust-based Ecology Fuels Improvement In Near-term Outlook

Kuaishou is the second-largest short video platform in China and the third-largest company by total number of mobile internet users in China. After years of product iteration and community operations, it has built a super commercial short video app with distinctive characteristics, rich content and a dynamic ecology of short videos and live streams. We like its unique position in the short video industry and solid growth in trust-based e-commerce. Initiate coverage with BUY. Target price: HK$116.00.

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Boustead Plantations (BPLANT MK)
FY22E DPS may miss our fullyear expectation

HOLD for its 7.3sen 1st interim DPS
1st interim DPS of 7.3sen (or MYR163.5m payout) will go ex on 8 June.
There is risk that BPLANT’s dividend payout may fall short of our expectation of 14.1sen (MYR316m) for FY22E if (i) it spends MYR280m in acquiring third party brownfield assets, and (ii) it is unable to dispose its Sarawak estates. We make no changes to our EPS and DPS forecasts. We maintain our RNAV-TP of MYR1.03 and keep our HOLD call. We prefer KLK MK (BUY, CP: 25.46, TP: 30.90). 

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