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Tenaga Nasional (TNB MK)
Pass-through still intact
A welcome relief, albeit temporary
The government has upheld Tenaga’s pass-through mechanism for 2H22 largely through direct compensation, thus alleviating a near-term overhang. Nevertheless, elevated coal prices means ICPT concerns would likely resurface again in six months time. Maintain HOLD with a lower MYR8.70 TP (-6%, DCF-based). We prefer YTL Power (YTLP MK, BUY, CP:
MYR0.67, TP: MYR0.90) in the utilities space.
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V.S. Industry (VSI MK)
No surprises in 3QFY22 results
Results in-line; Maintain HOLD
VSI 9MFY22 results came in within our expectations but missed the street’s estimates, making up 73%/67% of ours/consensus’ full-year forecasts respectively. We maintain our earnings assumptions and TP of MYR1.07, derived by pegging its fully-diluted FY23E EPS of 6.4 sen to a PER multiple of 16.7x, in-line with the company’s 5-year historical PER mean. The company’s near-term outlook is weighed down by on-going labour issues, raw material shortages and increasing cost pressures. However, we believe the light at the end of the tunnel is near, with the arrival of foreign labour in 4QFY22. We prefer ATECH (BUY, TP: MYR2.03) for our EMS pick.
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ComfortDelGro Corporation (CD SP)
Living With COVID-19
As Singapore moves on from the COVID-19 pandemic, we expect ridership to improve. Relaxation of COVID-19 measures has improved rail ridership while taxi passenger demand has surged. Singapore’s taxi industry is facing worsening demand-supply imbalance and stiff competition from ride-hailing competitors. CD has also won a new public bus contract in Australia, expanding its footprint down under. Maintain BUY with a slightly higher target price of S$1.73 (S$1.66 previously).
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Del Monte Pacific Limited – Stellar 38% earnings growth
4Q22 PATMI jumped 38% YoY. The results were better than expected. FY22 revenue and PATMI were 101%/105% of our FY22e forecasts. Despite a one-off US$2mn stock compensation, the 4Q22 earnings beat was from lower operating expenses. Final dividends up 42% YoY to 1.70 cents.
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Banking – Malaysia
Staying Resilient In The Face Of Economic Slowdown
The KLFIN index has outperformed the FBMKLCI by 11% ytd. While the economic slowdown may temper growth, the sector is likely to retain its relative outperformance.
This is premised on:
a) sector valuation of -1.0SD nearing average crisis trough of -1.5SD,
b) potential positive NIM surprise on an early interest rate hike cycle,
c) comfortable pre-emptive provisions, and
d) attractive 2022/23 dividend yields of 4.8%/5.4% respectively. Maintain OVERWEIGHT with HLBank as our top pick.
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DFI Retail Group
FY22F a year of investment
■ Divergence in HK and China’s Covid strategy could pose a challenge to nearterm border reopening between the two, delaying H&B segment recovery.
■ We expect weaker margins for DFI in FY22F in view of macro challenges and further investments in e-commerce.
■ Yonghui’s potential turnaround looks unlikely to offset the weaker core operations; we expect DFI to see profit decline in FY22F. Reiterate Hold.
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