ANALYSTS SAY: Buy, Sell, Hold (13 Oct)

UOB KAYHIAN

Keppel Corporation
De-risking inventory and deleveraging Keppel O&M

SINGAPORE | CONGLOMERATE | UPDATE
 Keppel Corporation (Keppel) has entered into an amended and restated framework deed with Borr Drilling (Borr). Keppel Offshore & Marine (KOM) will accelerate the delivery of three yet-to-be delivered jackup rigs to Borr between October 2022 and July 2023.

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mm2 Asia (MM2 SP)
Positioned To Accelerate Out Of The Downturn

We believe mm2’s earnings will experience an upward trend in FY23, driven by all three business segments: a) cinema attendance is expected to rise as Singapore’s and Malaysia’s cinemas operate at full capacities, b) resumption of in-person concerts, and c) ramping up of film production. Maintain BUY with a lower SOTP-based target price of S$0.098 (S$0.115 previously).

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UOB KAYHIAN

Construction – Malaysia
A Limited Breath Of Fresh Air

While Budget 2023 offers more to the sector as compared with last year, the absence of new mega infrastructure projects in Budget 2023 provides inadequate opportunities for contractors next year. Besides ongoing projects like Pan Borneo, ECRL and RTS, MRT3 is the only new mega project that will be rolled out in 2023. Meanwhile, labour shortage and ongoing inflation may continue to pressure the earnings growth. Maintain MARKET
WEIGHT. Top pick: Gamuda. 

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Q&M Dental Group
Tender win alleviates short-term pressure

■ Diagnostics arm Acumen has won a tender from the Ministry of Health (MOH) to operate a Joint Testing & Vaccination Center (JTVC), said QNM.
■ The tender, estimated to be worth S$3.6m in revenue, is for a period of 15 months, from October 2022 to December 2023.
■ Upgrade from Hold to Add, with TP unchanged at S$0.44, as current valuation of 15x forward P/E (-2 s.d. below 5-year mean) looks attractive.

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ComfortDelGro
A comfort pick

■ Strong mobility recovery in Singapore — CD’s rail ridership is back to 88% of pre-Covid levels, while P2P fares remained high despite easing pump prices.
■ Overseas operations also improving, but recent AUD and GBP weakness could dampen pace of earnings recovery (forex translation impact).
■ Maintain Add. Valuation attractive at 14% FCF yield and forward P/E, at 2 s.d. below historical mean, while offering defensive business model and net cash.

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Bursa Malaysia
Cutting ADTV for 2023-24F

■ Equity ADTV fell 42.2% yoy to RM1.74bn in 3Q22, 21.4% lower than the preCovid-19 level of RM2.22bn (average from 1Q17 to 4Q19).
■ We estimate Bursa’s 3Q22 net profit fell 38.8% yoy in 3Q22F, assuming equity income declined 42.2% yoy but derivative income rose 12.1% yoy.
■ Reiterate Hold as we believe the slide in equity ADTV is priced in, given the decline in its P/E valuation (from 24x in Mar 22 to 19.5x in Oct 22).

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