ANALYSTS SAY: Buy, Sell, Hold (7 Sept)

CGS CIMB

Sembcorp Industries
Strategically important sale of SEIL

SINGAPORE | ENERGY | UPDATE
 Acquisition consideration of S$2.059bn implies S$0.8bn/GW of gross installed capacity, which is higher than average comparable transactions of S$0.5-1bn/GW. We view the transaction as fair given the weak market environment for coal assets.
 Debt-capitalisation ratio improve to 62% from 66% for pro forma 1H22. We believe the Group will leverage its balance sheet and re-invest the proceeds into green assets.

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Powermatic Data Systems Ltd
A wireless connector

■ Powermatic provides an extensive range of wireless connectivity products and solutions. The group also offers ODM/OEM services for customers.
■ The group has an ongoing partnership with Qualcomm since 2014. As of endMar 22, Powermatic was debt-free with cash at c.50% of market cap.
■ While the chip shortage has affected lead times, management continues to improve on its mitigatory efforts.

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CGS CIMB

Media - Overall
Resilience from diversification

■ The media sector’s yoy earnings rebound in 1HCY22 validates our thesis that traditional advertising spending is bound to pick up yoy.
■ We are of the view that the 15th general elections (GE15) could spur more ad spend on traditional media given the overwhelming number of rural seats.
■ While we expect adex to stay strong heading to GE15, we are concerned that changes in the global streaming industry may disrupt Astro’s streaming plan.

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Malaysia Property
To stay in neutral gear

Sector lacks re-rating catalysts; maintain NEUTRAL
Although labour shortage and building material price rise are easing, further interest rate hikes (MIBG - 2H22E:+50bps, 2023E:+25bps) and political uncertainties from GE15 that would hit buying interest remain as key risks to the sector.

Elsewhere, we expect minimal goodies in the upcoming Budget 2023 (on 7 Oct) after announcement of the i-MILIKI initiative in July 2022. We like lowly-geared township developers with exposure in industrial properties. Our BUYs are ECW, SDPR. 

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Digital Telecommunications (DIF TB)
Long-term lease and 8% yield

Initiate with BUY; DIF is a stable yield play
DIF is the owner of telecom towers and fibre, used in mobile and fixedbroadband businesses, and the lease contracts have revenue-weighted average lease of 17 years remaining (vs 8.2 years at JASIF). The long lease duration and stable yield of c.8% from FY22E onwards lead us to initiate coverage on DIF with BUY and an end-FY23E TP of THB14.80, based on a DCF approach.

We prefer DIF over JASIF (Jasmine Broadband Internet Infrastructure Fund, CP THB8.70, HOLD, TP THB8.10) thanks to longer
lease terms and higher IRR (DIF’s 8.7% vs JASIF’s 5.6%).

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Thailand Retail
Strong SSSG in July - August

Maintain positive view on the sector
Thai retail sector same-store sales growth (SSSG) in July-August trended higher on a low base effect, consumption recovery and price hikes. September’s SSSG should also remain healthy, generating solid 3Q22E SSSG. We expect to see mixed GPM outcomes in 3Q22E with rises on changing product mix and price hikes but declines on cost inflation.

3Q22E retail sector earnings are likely to decrease QoQ on seasonal impact but grow substantially YoY on robust SSSG and higher profitability. HMPRO (BUY, TP THB16.80) is our Top Pick given its solid earnings recovery supported by improved SSSG and margin expansion.

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