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NetLink NBN Trust
Residential connections normalising
SINGAPORE | TELECOMMUNICATIONS| 1Q23 UPDATE 17 August 2022
1Q23 revenue and EBITDA were within expectations, at 25/27% of our FY23e forecasts. Revenue rose 4.8%, supported by a sharp rebound in diversion revenue. Central office remains a drag as customers surrender more equipment space.
Residential fibre connections rose 5,598 in 1Q23 (1Q22: +2,292). Last year was impacted by lockdowns and movement restrictions.
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REITs – Singapore
S-REITs Bi-Weekly Updates (1-15 Aug 22)
S-REITs suffered a mild decline but underperformed the STI by 1.8% in the first two weeks of August. Inflation has moderated with US CPI easing 0.6ppt mom to 8.5% in Jul 22. S-REITs are resilient due to their defensive characteristics and stable cash flows despite the outlook being clouded by the Russia-Ukraine war and potential economic slowdown. Focus on reopening plays. BUY FCT (Target: S$2.74), FEHT (Target: S$0.83) and LREIT (Target: S$0.96). Maintain OVERWEIGHT.
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Bumitama Agri (BAL SP)
Glows In The Dark
We expect higher sales volume in 2H22 on higher production and sales normalisation as refiners are able to draw down more stocks in 3Q22. As of Jun 22, BAL’s inventory level was at 70% of its total capacity and we expect it to normalise by end-3Q22. CPO prices have recovered from the recent low with the temporary suspension on exports levy. Having said that, 2H22 earnings could come in lower hoh, mainly dragged by lower CPO and palm kernel ASPs hoh. Maintain HOLD with a target price of S$0.65. |
BRC Asia (BRC SP)
3QFY22: Excellent Quarter But Margins Take A Hit
BRC reported strong 3QFY22 net profit of S$20.4m (+100% yoy), in line with our expectations, backed by higher delivery volumes and better construction demand.
However, a lower-margin product mix compressed margins. Orderbook remains robust at S$1.15b, helped by increased demand for public housing and civil engineering works.
Labour supply is still below pre-pandemic levels and is expected to improve going into 4QFY22. Maintain BUY with a lower target price of S$2.00 (S$2.15 previously).
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Ranhill Utilities (RAHH MK)
An asymmetrical tariff play
Initiate with BUY and MYR0.60 TP
We initiate coverage of Ranhill with a BUY rating and MYR0.60 TP (based on a sum-of-parts [SOP]). We view risk-reward as being favourable with RSAJ’s long overdue water tariff hike a step closer to fruition following recent Cabinet approval, but not yet priced-in. A potential reversion to cash dividend (c.5% yield) could further enhance the stock’s appeal.
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Central Pattana (CPN TB)
Smooth take-off
Maintain BUY, raise TP to THB78
CPN’s 1H22 performance beat its base case guidance set in early-22. Nonrental segments like hotels and residential look poised for exponential growth as the country’s reopening gathers pace. We raise 2022 earnings by 6% and lift our DCF-based TP by 11% to THB78 as we roll over our valuation to FY23E. Key long-term growth drivers should be capacity expansion and fast-growing non-rental businesses, rather than reductions in rental discounts. The rental business is growing at a single-digit rate as
CPN looks to slowly reduce its rental discounts in order to help SME
tenants.
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