ANALYSTS SAY: Buy, Sell, Hold (30 Nov)

UOB KAYHIAN

Frencken Group (FRKN SP)
3Q22: Impacted By Cost Pressures, Weaker Currency And Inventory Write-down

3Q22 earnings of S$11m (-26% yoy/-17% qoq) was below expectations, 9M22 formed 66% of our full-year estimate. 3Q22 revenue fell 1% yoy, with semiconductor (+16% yoy), life science (+8% yoy) and medical (+3% yoy) recording growth while industrial automation (-35% yoy) and automotive (-7% yoy) declined. Frencken expects to pass on higher costs to customers in 4Q22 and expects stable hoh revenue in 2H22. We cut our 2022 and 2023 EPS by 16%. Downgrade to HOLD. Target price: S$1.07.

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Lendlease Global Commercial REIT (LREIT SP)
Enhancing 313@Somerset And Jem; Weathering Higher Cost Of Debts

LREIT will utilise untapped GFA of 10,200sf to progressively add more prime spaces at 313@Somerset. The multi-functional event space will attract more young shoppers when it is operational by end-23. The new Kopitiam Food Hall, which opened on 15 Sep 22, will enhance the mix of anchor tenants at Jem. We cut FY24 DPU by 10% due to higher S$ interest rates and refinancing of a term loan of €285m in Oct 23. Maintain BUY for an attractive FY23 yield of 6.4%. Target price: S$0.82.

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UOB KAYHIAN

Hong Leong Bank (HLBK MK)
1QFY23: Solid Performance Priced In

Hong Leong Bank reported 1QFY23 earnings that were broadly in line. Despite the solid performance, we are downgrading our call to a HOLD from a BUY with a lower target price of RM23.30 (1.46x FY23F P/B, 11.3% ROE) from RM24.00 on lower NIM outlook and valuation grounds. The stock is trading at its historical mean P/B of 1.30x. Given that our target price implies +1.0SD to its historical mean P/B, we think we have adequately priced in the stock’s solid defensive qualities.

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Malaysia Airports Holdings (MAHB MK)
3Q22: Losses Narrow Significantly; At A Tipping Point

MAHB further narrowed its net losses by 96% yoy on the back of resilient revenue growth (+167% yoy), with its Malaysian operations recording positive EBITDA following swift international patronage recovery. Moving forward, we expect MAHB to turn around its net losses in 4Q22 following better traffic volume from both its Malaysian and Turkish operations. We also like MAHB for its discounted valuations and event catalysts of formulating a new OA. Maintain BUY. Target price: RM7.52. 

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Hong Leong Bank (HLBK MK)
1QFY23 earnings above our expectations

BUY maintained, TP raised
HL Bank’s earnings momentum continues to be robust, supported by stable domestic earnings and strong contributions from Bank of Chengdu. We have revised up FY23/24 earnings by 5%/2%, but our FY23 ROE forecast of 11.7% remains conservative relative to management’s guidance of >12%. BUY maintained with a higher TP of MYR24.10 (+50sen; CY23E PBV of 1.4x, ROE: 11.6%).

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7-Eleven Malaysia Holdings (SEM MK)
Robust growth in core segments

Maintain BUY with higher TP of MYR2.35
SEM’s 3Q22 results met expectations. We anticipate stronger sequential earnings on the back of higher store footfall and average sales per store during the school holiday and year-end festive periods. We tweak our FY22E-FY24E earnings by c. 1% p.a. on minor housekeeping adjustments. Rolling forward our valuation year to FY23E, we lift our TP to MYR2.35 based on unchanged 28x PER, about -0.5SD to mean. 

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