UOB KAYHIAN

iX Biopharma Ltd – Journey taking longer but progressing

Journey taking longer but progressing
SINGAPORE | HEALTHCARE | UPDATE
 Annuity stream from milestone and royalty payments of Wafermine is on track, with out-licensing partner Seelos Therapeutics (SEEL US, Non-Rated) planning Phase 2 trials for Complex Regional Pain Syndrome (CRPS) in 2QFY23.

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REITs – Singapore
S-REITs Bi-Weekly Updates (16-30 Sep 22)

A disciplined and hawkish Fed and the UK’s fiscal policy mishap sent S-REITs reeling by 7.8%. We see sanity gradually being restored as nerves are calmed. S-REITs are resilient due to their stable cash flows.

The panic selling has brought valuations to attractive levels and bargains have emerged. Our bottom-up and diversified BUY picks are CAT (Target: S$1.29), FCT (Target: S$2.56), LREIT (Target: S$0.91), MINT (Target: S$3.12) and MLT (Target: S$1.94). Maintain OVERWEIGHT. 

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MAYBANK KIM ENG

StarHub (STH SP)
Tailwind from reopening

Upgrade to BUY on reopening potential
We have introduced an enhanced ESG tear sheet for Starhub with an above-average overall score of 55, based on its aggregated quantitative/qualitative/ target-based metrics. Due to DARE+ transformation, we expect EBITDA margin to decrease further as opex continues to rise in 2H22.

But with JOS SG/MY announcing full-year contribution coupled with improvement in roaming business from the expected re-opening in China, we think the stock has been oversold and transient risks are largely priced in. Upgrade from HOLD to BUY with unchanged DCF-based TP of SGD1.32, leaving 21% growth potential.

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PropNex Ltd (PROP SP)
Applying the brakes

Fresh property cooling measures kick in today
The government introduced more property cooling measure late last night, largely aimed to moderate demand in the HDB resale market to ensure affordability.

Even though buyers may take some time to digest the new rules, we think the impact should be quite modest compared to the previous rounds. In our view, the latest measures are likely to come as a sigh of relief to investors and remove a major overhang given the government is careful not to be overzealous to cool the Singapore residential market. Maintain BUY and TP of SGD1.95. 

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Frencken Group Ltd (FRKN SP)
Challenging outlook; D/G to HOLD

Lowering TP to SGD1.05 from SDG1.80
Tech stocks globally are still undergoing a de-rating and with a potential recession looming, we are mindful demand might suddenly taper off unexpectedly.

As a result, we cut our FY22-23E earnings by 2-14% to factor in slower growth across certain segments and reduce our target multiple from 14x to 8.5x and downgrade Frencken from BUY to HOLD with a lower TP of SGD1.05 due to the muted macro outlook. We also transfer coverage to Jarick Seet.

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Aurelius Technologies (ATECH MK)
All things under control

Maintain BUY and TP of MYR2.07
We came away from ATECH’s recent investors briefing feeling positive. We maintain our BUY call, forecasts, and TP of MYR2.07 from pegging our CY23 EPS of 13.7sen to the industry’s historical 5-year weighted average PER of 15.1x.

We like ATECH for (i) its robust earnings growth prospects; (ii) growing exposure to higher value-added multicomponent integrated circuits (MCICs); as well as (iii) its operational resilience, underpinned by its strategy to grow its wallet share with regards existing customers.

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