buy sell hold 2021




Tech Manufacturers – Singapore

Pricing In PE Multiple De-rating Due To Chip War And Tech Leaders’ PE De-rating

Since the US imposed new restrictions on semiconductor exports to China on 7 Oct 22, industry leaders including AMAT, ASML, Intel and TSMC have started indicating a more challenging outlook. Semiconductor stocks under our coverage (AEM, UMS and Frencken) may not be immediately impacted, but we are reducing our valuation multiple peg to -1SD from mean to price in the valuation de-rating of their major customers and weaker sentiment. Our top picks are Venture and Nanofilm for low semicon exposures


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Public Bank (PBK MK)
Provision Buffers Capable Of Weathering Extreme Stress Conditions

We note that Public Bank has set aside extremely conservative pre-emptive provision buffers that are suited for extreme stress conditions. This places the group in an excellent position to weather the current economic downturn while benefitting from the recovery given ample scope for writebacks. In addition, valuations are attractive (-1SD to historical P/B mean). Maintain BUY with a higher target price of RM5.10 (1.87x 2023F P/B, ROE: 12.9%) from RM4.85 as we roll over our target price to 2023.



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Bermaz Auto Berhad (BAUTO MK)
Going for the record

Maintain BUY and MYR2.90 TP

BAuto targets a higher: (i) 18k-23k units of vehicle sales (FY22: 14k units) & (ii) DPR of 70% in FY223-24, a positive. We do not rule out BAuto surpassing these targets, given the high bookings, attractive incentives and new models rollout. Between these two, the DPR target is easier to achieve due to its financial strength. We have raised our FY23-25 DPR to 70% (vs. 65% previously). Our earnings estimates (3-year NP CAGR of 25%) & TP (15x FY23 PER) are unchanged. Yields are attractive at >7%.


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Record 3Q22E loss, merger to complete in 1Q23E

HOLD: Expect record 3Q loss, and we prefer DTAC

We forecast a record 3Q22 core net loss of THB3.1b (vs THB2.4b loss in 2Q22) due to lower revenue (high inflation and fierce competition) and higher expenses. If TRUE and DTAC cannot merge by 1Q23, high debt and negative free cash flow could force TRUE to sell DIF shares to raise cash again. Reiterate HOLD on TRUE with the same post-merger TP of THB5.40. We prefer DTAC over TRUE thanks to higher upside to the target price and relatively healthy 3Q22E core net profit (+3.0% YoY, +4.0% QoQ). 


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Grand Venture Technology Ltd
Front-end diversification to take longer

■ We think it will take longer for GVT’s business with potential front-end
customers to take off, as GVT attempts to provide unique solutions.

■ Hence, we have reduced our FY22-24F revenue forecasts leading to 8.1-
35.9% EPS reductions as GVT’s cost base has increased via expansion.

■ With a recovery in net profit only expected in FY24F, our TP is cut to S$0.40
as a 9.6x (-0.5 sd below its 4-year average) P/E multiple factors this in.

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Counter NameLastChange
AEM Holdings2.290-0.070
Best World2.4600.020
Boustead Singapore0.945-0.015
Broadway Ind0.125-0.003
China Aviation Oil (S)0.905-0.005
China Sunsine0.400-0.010
Delfi Limited0.895-0.005
Food Empire1.280-0.040
Fortress Minerals0.305-0.015
Geo Energy Res0.300-0.005
Hong Leong Finance2.480-0.010
Hongkong Land (USD)2.830-0.020
ISDN Holdings0.3000.005
IX Biopharma0.040-0.005
KSH Holdings0.2550.005
Leader Env0.050-
Ley Choon0.0440.001
Marco Polo Marine0.067-0.002
Mermaid Maritime0.136-0.003
Nordic Group0.310-0.005
Oxley Holdings0.089-
REX International0.1380.003
Southern Alliance Mining0.445-
Straco Corp.0.4950.010
Sunpower Group0.205-0.005
The Trendlines0.069-
Totm Technologies0.022-
Uni-Asia Group0.825-
Wilmar Intl3.4000.020
Yangzijiang Shipbldg1.740-0.030

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