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Brewers
Cheers to a robust 2H22F!
■ We reiterate overweight rating on Malaysian brewers, as we expect stronger 2H22F earnings driven by higher sales volume and selling price hikes.
■ In our view, brewery sector’s valuations are attractive at 19.2x 1-year forward P/E, 25.6%/17.9% discount to its 5-/10-year mean of 25.8x/23.4x.
■ We have Add calls on both brewers. Our top pick is HEIM due to its cheaper valuations, higher dividend yields and more premium sales mix.
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Siam Global House
Earnings and valuation appear to diverge
■ We expect net profit to grow by 25% yoy in 2H22F and mark a new high in 1Q23F but the share price appears slow to realise the robust growth.
■ We believe strong net profit in 2H22F will help rerate its forward P/E back to at least 25.1x, implying 18% potential upside. Reiterate Add.
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Singapore Banking Monthly
Volume and margins still rising
SINGAPORE | BANKING & FINANCE | UPDATE
August 3M-SIBOR was up by 25bps MoM to 2.72%, the highest in over a decade. Loans growth in Singapore rose 6% YoY in July.
Singapore domestic loans grew 6.3% YoY in July, tracking our estimates,
while Hong Kong’s domestic loans declined 0.08% YoY and 0.42% MoM in July.
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Frasers Logistics & Commercial Trust (FLT SP)
Logistics Portfolio Resilient But German Economy Could Be Achilles’ Heel
Germany imports 55% of its natural gas from Russia and its economy is besieged by surging energy prices that have increased 10x compared with pre-COVID-19 levels.
Fortunately, FLT’s Germany portfolio has a long WALE of 6.3 years and annual rental escalation is CPI-linked. Germany accounted for 22.9% of FLT’s portfolio valuation as of Jun 22. Distribution yield is attractive at 5.8% for FY23. Maintain BUY but lowered target price to S$1.60.
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Banking – Malaysia
Solid 2Q22 Performance Despite Non-Interest Income Headwinds
The sector delivered a robust 2Q22 PBT growth of 13% yoy and a commendable 5% earnings growth despite the impact of the prosperity tax. This was underpinned by lower provisions and NIM tailwinds. Our positive view on the sector is premised on:
a) attractive valuations of -1SD to the historical mean P/B,
b) NIM tailwinds,
c) continued credit cost improvement into 2023, and
d) attractive sector 2022/23 average dividend yields of 5%.
Maintain OVERWEIGHT.
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Geely Auto (175 HK)
August Sales Up 39% yoy And Flat mom, In Line With Estimates
Geely’s August sales spiked 39% yoy and remained flat mom at 122,635 units, in line with estimates. Looking ahead, management remains cautiously optimistic on the SepDec 22 outlook on strong order flows and easing supply chain bottlenecks.
The Leishen series will emerge as a new growth driver, but margins will probably come under pressure due to the lower profitability of the Leishen series vs ICE-cars. We keep our 2022-24 EPS estimates unchanged.
Maintain HOLD. Target price: HK$15.50.
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