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Hyphens Pharma International - Franchise expands with acquisitions
Recommendation: BUY (Maintained); TP S$0.43 Last close: S$0.31; Analyst Paul Chew
- 1H22 revenue and PATMI were 54%/67% of our FY22e forecast. Earnings were above expectations due to a then higher-than-expected earnings contribution from newly acquired Novem Ltd and associates.
- Underlying organic growth was an 11% YoY rise in PATMI to S$4.8mn. Growth was broad-based across specialty pharma and proprietary brands.
- We maintain our FY22e earnings. We expect some upfront staff and technology costs in 2H22 with the establishment of DocMed to develop a healthcare platform for doctors, drug companies and other medical vendors. Our BUY recommendation and DCF target price of S$0.43 is maintained. With Novem, Hyphens can profitably develop the public sector channel for its specialty products to complement its strength in private sector clinics.
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Singapore Telecommunications Ltd - Currency drag this quarter
Recommendation: ACCUMULATE (Maintained); TP S$3.05, Last close: S$2.65; Analyst Paul Chew
- 1Q23 results were within expectations. 1Q23 revenue and EBITDA were 24%/24% of our FY23e estimates. We removed Amobee from our forecast. It has been classified as a subsidiary for sale. There was a 4% headwind from Optus due to weaker AUD.
- 1Q23 underlying EBITDA expanded 3% YoY (or up 5% in constant currency) to S$977mn, excluding NBN migration revenue and Amobee. Regional associates' earnings rose 12% YoY to S$411mn. The 6% depreciation in the Thai Baht and Philippine Peso also impacted earnings.
- Our FY23e PATMI is raised 5% to S$2.15bn to account for the S$129mn exceptional gain from dilution of stake in Australia Tower Network and share of Airtel revaluation of foreign currency convertible bonds. Revenue and EBITDA forecasts were modestly impacted by the removal of Amobee.
Our ACCUMULATE and SOTP TP are maintained at $3.05. Singtel has also announced a 3.3% stake in Bharti Airtel worth S$2.25bn to Bharti Telecom. The gain on sale for Singtel is S$0.6bn. We view the disposal positively. It reflects the ability to realise gains from its portfolio of associates trading at a holding company discount and an opportunity for special dividends.
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Grab Holdings (GRAB US)
Profit-versus-growth dilemma plays out
Still overvalued; Maintain SELL
2Q22 PATMI loss of USD547m (-29% YoY, +29% QoQ) missed ours and the
streets estimates. However, 2Q22 Adjusted EBITDA (AEBITDA) as a % of GMV (gross merchandise value) improved for the 3 rd consecutive quarter to -
4.6% (1Q22: -6.0%, 2Q21: -5.5%), but this came at a cost to GMV growth in
the delivery segment, which missed GMV guidance of USD2.55-2.65b
(2Q22: USD2.48b).
Even after we increased our EV/S multiple to 1.4x for delivery and to 1.8x for mobility (anchored to Uber) to reflect stronger profitability prospects, Grab’s target price of USD2.83 still appears overvalued.
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Tiong Woon Corporation Holding (TWC SP)
FY22: Healthy Double-digit Earnings Growth; Expect A Better FY23
Tiong Woon’s FY22 earnings of S$11.4m (+15% yoy) is achieved on the back of a 9% yoy growth in revenue and 2.6ppt increase in gross margin due to better demand for crane and higher crane rental rate.
However, FY22 earnings fell short of our expectation due to higher-than-expected impairment loss for receivables. We believe Tiong Woon is a beneficiary of the construction industry upcycle in Singapore and expect FY23 EPS to grow by 54% yoy. Maintain BUY with a 3% lower target price of S$0.85 (0.7x FY22 P/B).
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Singapore: Mandarin Oriental International (MAND SP): Big fan of luxury travel [BUY, Initiating Coverage, TP US$2.30]
Ÿ Bullish on Mandarin Oriental’s recovery prospects due to continued heightened enthusiasm for travel
Ÿ Riding on less price sensitive travellers, with geographically diversified luxury portfolio of 36 hotels and 7 residences
Ÿ Attractive valuation at 0.75x P/NAV, which is c.0.5SD below its five-year historical average
Ÿ Initiate with BUY recommendation and a TP of US$2.30
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UMW Holdings (UMWH MK)
1H22: Above expectation
1H22’s core net profit accounted for 59% of our FY estimate, with 2Q22 replicating 1Q22’s performance as it continued to enjoy strong vehicle sales from the SST holidays.
With 2H expected to match 1H, underpinned by the strong backlog (60k units), our upgraded FY22 earnings (+21%) reflect higher Toyota sales expectations (+22%). Our TP is unchanged, as we roll over valuations to FY23, pegged to 16x PER (-0.5 SD valuation)
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