buy sell hold 2021




CapitaLand Investment (CLI SP)
1H22: Weaker-than-expected Results But Outlook Remains Solid

CLI reported weaker-than-expected 1H22 results with PATMI declining 38% yoy as a result of China’s COVID-19-related restrictions. While some of CLI’s near-term growth outlook hinges on China returning to normal, we nevertheless believe that the company’s position remains solid with lodging and private management continuing to exhibit strong growth.

Maintain BUY with a slightly higher target price of S$4.28 (previously S$4.13).


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City Developments (CIT SP)
1H22: A Record Result Due To Divestment Gains

CDL reported a significant increase in its PATMI due to the completion of two large divestments. As a result, it declared a special interim dividend of S$0.12 which is likely to be repeated in 2H22 given that another two large en bloc divestments should be completed before the year end.

The company’s hospitality segment remains its best performer and should continue to do well in 2H22 should corporate travel return in force. Maintain BUY. Increase target price to S$9.87.


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HRnetGroup Ltd (HRNET SP)
Positive dynamics

1H22 net in line; declares interim dividend
1H22 underlying NPAT (excluding P&L impact of investments in mainly HR marketable securities) jumped 36% YoY to SGD42.6m, driven by robust operating performance of both flexible staffing (FS) and professional recruitment (PR) in its key markets.

Overall, 1H22 net profit was in line with market expectations and our FY22-24E EPS forecasts are largely unchanged. The group declared a maiden interim DPS of 2.13 cents, representing 50% of its core earnings. Maintain BUY with TP of SGD1.07 as we roll forward our valuation and based on 15x FY23E P/E.
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CapitaLand Investment Ltd

Stronger 2H22 expected

• 1H22 headline profit after tax and minority interest (PATMI) dipped 38% year-on-year (YoY) but operating PATMI rose 31% YoY
• Robust growth in fund management and lodging management fee-related earnings (FRE)

• Drag from China in 1H22; potential recovery in 2H22

Investment thesis
CapitaLand Investment Limited (CLI) has emerged as a more nimble and resilient entity following its strategic restructuring, and we believe it would operate with a more asset-light business model with strong focus on recurring income streams. Management has reiterated its target of achieving a funds under management (FUM) target of SGD100b by 2024, and would continue to focus on new economy assets such as logistics and data centre properties.

Although CLI’s lodging management business has been impacted by the pandemic, we have started to see a more meaningful recovery, and CLI’s focus is on management and franchise contracts. CLI had 153k lodging units under management (including Oakwood acquisition in Jul 2022), and management aims to grow this to 160k units by 2023. Capital recycling would also remain as one of CLI’s key focuses, with an annual divestment target of



CapitaLand Investment Ltd (CLI SP)
Moving Past A China Blip

Slow quarter, better 2H22 fundamentals

CLI’s 1H22 operating PATMI at SGD346m (+31% YoY) was 46% of our FY22 estimate and could have been better, sans retail rental rebates in China (1.2 months), and slower property churn. While funds-under-management (FUM) was flat, fee-related earnings (FRE) rose 10% YoY and real estate
investment business (REIB) jumped a stronger 59% YoY.

Management remains confident on its FY22 SGD3b capital recycling target (vs SGD1.6b YTD), and we expect better fundamentals in 2H22 with FUM recovery and strengthening RevPAU. We see strong earnings growth supporting valuations, which are undemanding vs peers. Further ahead, we see
accelerating FUM growth, expanding FRE, and faster conversion of onbalance sheet assets to FUM creating earnings upside. Our SOTP-based TP stays at SGD4.30. Reiterate BUY.


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Pan-United Corporation Ltd.
Construction recovery hit slight snag in 1H22

 1H22 revenue in line with our expectations, at 51%. Profit however, came in lower at 34%
as result of higher staff and materials costs.
 Net profit grew 83% YoY driven by higher ASP of ready-mixed concrete (RMC) +18% YoY,
higher GPM +1.4% and a higher share of results from associates of $3.6mn.
 Workplace fatalities and dengue hampered recovery. Volumes declined 10-15% as a result
of the spate of stop-work orders issued by the authorities to construction sites.
 Maintain BUY with lower target price of S$0.54, from S$0.68. We trim FY22e/FY23e
earnings by 26%/11% respectively on account of higher staff, utilities and materials costs.
Our TP is based on 12x FY22e P/E, a 20% discount to its 10-year historical average P/E on
account of the still uncertain business environment.


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