ANALYSTS SAY: Buy, Sell, Hold (8 Nov)

CGS CIMB

CapitaLand Investment Limited
Growth supported by RevPAU recovery

SINGAPORE | REAL ESTATE | 3Q22 RESULTS
 9M22 revenue of S$2,331mn (+36% YoY) was above our estimates, forming 88% of our forecast.
 RE investment revenue grew 48% YoY, driven by an occupancy recovery in their core markets, Singapore and India. Fee-related revenue was up 16% YoY, lifted by PE fund
management (+44%) and lodging management (+48%) as RevPAU recovered to 92% of prepandemic 3Q22 levels.

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Singapore Airlines
Enumerating downside risks to SIA

■ SIA hosted its post-1HFY3/23 results briefing yesterday. We reiterate Add as we expect SIA’s profits to remain elevated in the next two quarters.
■ Downside risks could become more apparent next year as cargo markets weaken and competition pressures passenger yields.
■ We suggest investors trim positions in the stock when China’s border reopening is announced. Our TP is based on CY23F P/BV of 0.9x (mean).

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CGS CIMB

Lendlease Global Commercial REIT
Good leasing traction to kick start the year

■ 1QFY6/23 retail reversions positive at c.1%, tenant sales at 113% of preCovid levels (vs. market’s 109%). Portfolio occupancy remains high at 99.3%.
■ Adjusted interest coverage ratio of 2.3x caps regulatory gearing at 45%; further deterioration mitigated by rental growth/deployment of unutilised GFA.
■ Portfolio fundamentals still intact. Keep Add with lower DDM TP of S$0.88.

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Singapore Airlines (SIA SP)
1HFY23: Results Broadly In Line; Expecting Peak Performance In The next Quarter

SIA’s 1HFY23 operating profit of S$1.23b was broadly in line at 45% of our full-year forecast, but net profit of S$927m was slightly ahead of our projection at 50% of our fullyear forecast. Advance sales as at end-1HFY23 were at 40% above pre-pandemic levels, indicating a very strong 3QFY23 financial performance. Beyond 3QFY23, we expect SIA’s financial performance to start to normalise as competition catches up and drives down yields. Maintain HOLD with an unchanged target price of S$5.18. 

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OUE Commercial REIT
Riding on recovery tailwinds

■ 3Q22 NPI of S$48.3m was in line at 71.5% of our FY22F forecast.
■ Singapore showed strength, with positive office/retail reversions, strong RevPAR recovery and better positioning of Hilton Orchard post-rebranding.
■ Maintain Hold rating with a lower TP of S$0.36.

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ST Engineering
Divesting loss-making US marine business

■ STE plans to divest loss-making US marine business by end-Dec 22. Purchase price is c.S$21m, with additional earn-out of up to c.S$14.5m.
■ We view the divestment favourably given the business has been loss-making since FY17. Order book of S$23bn still at record high even after divestment.
■ We raise our FY23-24F EPS by 4-5% on account of better group margins. Reiterate Add with higher TP of S$3.99, based on blended valuations (Fig. 3)

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