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Singapore Post (SPOST SP)
Australia Earmarked As The Next Growth Engine
SPOST’s management provided more updates about the group’s current operations. Domestic letter and mail volumes are expected to drop further while e-commerce volumes will suffer a temporary dip as Singapore reopens.
Air freight costs remain high with more narrow-bodied aircraft transiting at Changi Airport and ongoing China lockdowns dragging postal volumes. The logistics segment is set to grow due to the full-year consolidation of FMH. Maintain BUY with a lower target price of S$0.87.
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Telecommunications – Malaysia
Celcom-Digi Merger Receives MCMC Clearance, Positive For Digi
The regulator has given its clearance for the proposed merger of Celcom and Digi. This is positive for Digi and Axiata. We estimate RM500m in net cost savings (after factoring in the 5G wholesale fee) for the MergeCo, lifting 2023’s proforma net profit by 15%.
Upgrade Digi to BUY with a lowered RM3.85 fair value. Axiata benefits as its cash flow crunch will ease (RM2b post-merger cash flow in 4Q22). Maintain MARKET WEIGHT.
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Invest ASEAN SG 2022
Navigating growth & inflation
Cautiously upbeat. Stay defensive
Of the 19 corporates presenting at our IA Singapore Week conference, a majority expects to deliver growth despite underlying macro headwinds. Some see opportunities for expansion through M&A, leveraging on robust balance sheets.
Of course, rising interest rates, inflation, geopolitics as well as labour shortages are critical concerns. Strategies are focusing on limiting their impact. We maintain our defensive stock picks balancing strong earnings visibility and competitive moats ( DBS, OCBC, SGX, CDREIT, CD) with those offering thematic growth (CLI, SingTel, ST Eng, Raffles Med, Venture). |
Gamuda (GAM MK)
3QFY22: Strong!
Beat expectations; maintain BUY
Earnings positively surprised for the 4th consecutive quarter; the beat this time came largely from its property op. 9MFY22 net profit (+47% YoY) was 83%/89% of house/street’s FY22E. We raise FY22E net profit by 14% in anticipation for the strong 3Q to sustain.
We also raise FY23/FY24E net profit by 11%/4%. Our RNAV-TP is tweaked to MYR4.20 (-8sen) on rolling forward valuations. We continue to like Gamuda for its delivery track record, strong balance sheet and ESG initiatives.
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United Malacca Bhd
Indonesia to drive yields moving forward
■ FY4/22 core net profit jumped 5.3x yoy due to higher CPO prices; core EPS was in line while DPS underperformed.
■ We expect a better FY23F on higher CPO prices and Indonesian FFB yields.
■ We raise our TP to RM5.55 but reiterate our Hold call as we believe UMB appears fairly valued at current levels.
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Sembcorp Marine
More reprieve for balance sheet to come
■ We expect little help for SMM’s cashflow with the US$50m from Transocean for delivering drillship Atlas. Net gearing as of 1Q22 stood at 0.38x.
■ The delivery of the second drillship, Titan (scheduled for 2H22), could help relieve SMM’s cashflow with a delivery payment of US$350m.
■ Reiterate Hold and TP of S$0.09 based on 0.8x FY22F P/BV (3-year historical average).
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