buy sell hold 2021




Property Development outlook turns positive


 1H22 profit of $71.3mn was above our estimates, at 60.5%. The beat came from Property Holding (PH).
 Housing policy relaxation measures in Dongguan drove sales higher. Sales accelerated in the 1.5 months after the implementation of the relaxation measures.

 RMB271.6mn (S$55mn) in net auction proceeds recovered from RMB330mn in defaulted loans. The potential disposal of Pudong Mall, which we estimate in FY23 could see a further recovery of the defaulted loans.

 Upgrade to ACCUMULATE from NEUTRAL with unchanged SOTP target price of S$1.39. Catalysts for a TP upgrade are a recovery in the Chinese property market and its China hotel portfolio.


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BRC Asia
Construction sector recovery remains on track


 9MFY22 revenue and net profit was in line with our expectations at 75%/75% of FY22e. 3Q22 net profit spiked 113.4% YoY driven by the continued recovery in the construction sector and the moderation of steel prices.

 Construction order books inched up slightly to $1.135bn from ~$1bn in the previous quarter. Strong demand for public housing and infrastructure projects in Singapore continued to drive up the Group’s order books.

 Construction site activity levels adversely affected by workplace fatalities and dengue in 1H22, impeding construction progress.

 Maintain BUY with an unchanged target price of S$2.26. Our TP is based on 8x FY22e P/E, still at a 15% discount to the 10-year historical average, on account of the uncertain external environment. We kept FY22e and FY23e earnings unchanged as we expect construction activity to continue its recovery in the next two years. Stock is now trading at 10.7% dividend yield.


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Oversea-Chinese Banking Corp Ltd
Growth in NIMs lifts profits


 2Q22 earnings of S$1.48bn were in line with our estimates, from higher net interest income and non-interest income, and lower allowances. 1H22 PATMI is 47% of our FY22e forecast. 2Q22 DPS rose 12% YoY to 28 cents.

 NII grew 16% YoY underpinned by loan growth of 8% YoY and NIM increasing 13bps YoY to 1.71%. Total non-interest income grew 6% YoY due to higher trading and insurance income offset by lower fee income. Allowances fell 69% YoY to S$72mn.

 Maintain BUY with an unchanged target price of S$14.22. Our FY22e estimates remain unchanged. Catalysts include lower provisions and higher interest income as economic conditions improve. OCBC is our preferred pick amongst the three banks due to attractive valuations, upside in dividend from a 15% CET 1 and lower provisioning as the Indonesian and Malaysian economies recover.

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DBS Group Holdings Ltd
Higher net interest income support profits


 2Q22 earnings of S$1.82bn in line with our estimates due to higher net interest income offset by lower fee income and other non-interest income. 1H22 PATMI is 47% of our FY22e forecast. 2Q22 DPS up 9% YoY at 36 cents.

 NIM increased 13bps YoY to 1.58% and loan growth of 7% YoY lifted NII. NIM grew 12bps QoQ. Fee income fell 12% YoY and other non-interest income dropped 10% YoY due to weaker market sentiment.

 Maintain BUY with an unchanged target price of S$41.60. Our FY22e estimates remain unchanged. For FY22e, management guided benign provisions, stable growth in loans and improved NIMs. We believe there is upside to the NIM guidance. A 50bps move in interest can raise earnings by 13%.


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StarHub (STH SP)
2Q22: In Line; Top-line Growth From All Service Segments

2Q22 revenue grew 12.2% yoy and 6.5% qoq, in line with expectations. Core PATAMI dropped 16.6% yoy but grew 4.9% qoq to S$31.2m, driven by higher upfront capex investments.

Starhub is on track to meet/exceed 2022 guidance. The mobile segment saw higher take-up of its 5G plans while the broadband and enterprise segments benefitted from consolidation of acquisitions. The entertainment segment saw higher subscription prices and subscribers. Maintain HOLD. Target price: S$1.30.


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Wilmar International (WIL SP)
1H22: Results Above Our Expectations

Wilmar’s 1H22 core net profit of US$980m came in above our expectations. The positive variance mainly came from strong operating margins. We expect 2H22 earnings to remain resilient, supported by greater sales volume and higher margin for its consumer products as well as higher contribution from sugar millings.

We expect the palm upstream operation contribution to be lower as commodity prices have softened recently but still better yoy. Maintain BUY. Target price: S$5.50.


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