UOB KAYHIAN

Riverstone Holdings (RSTON SP)
3Q22: Underperformance As Headwinds Persist; Ceasing Coverage

For 3Q22, net profit was below expectations, dragged by falling ASPs and moderating demand for healthcare gloves. The healthcare glove segment faces ongoing headwinds due to an unfavourable demand-supply imbalance. Cleanroom gloves remained resilient in 3Q22 with ASPs holding steady, although demand is expected to soften slightly in 4Q22 due to the ongoing zero-COVID policy in China. With no immediate catalysts, we will be ceasing coverage on Riverstone. The last call is HOLD. Target price: $0.67.

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Banking – Malaysia
Diminishing Earnings Tailwinds; Downgrade To MARKET WEIGHT

The sector delivered a robust earnings growth of 20% yoy in 3Q22 on lower provisions and NIM expansion. However, earnings tailwinds are expected to dissipate as we approach the tail end of the interest rate upcycle coupled with moderating loans growth. This has prompted us to downgrade the sector from OVERWEIGHT to MARKET WEIGHT with the sector now trading close to its historical mean P/B. Our two sector top picks are CIMB and Public Bank. 

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UOB KAYHIAN

Yinson (YNS MK)
Project FPSO Agogo Officially Starts; FPSO PAJ To Be Next

We are positive on FPSO Agogo’s progress. Although it is not a final contract announcement as the client is a recently-formed JV entity, the agreement has essentially kick-started the project, with secured client prepayments to cover for major project milestones. The follow-on final contract may have returns significantly above our and the market’s earlier expectations. FPSO PAJ (under the same client) may be the next FPSO to see updates. Maintain BUY. Increase target price to RM4.45.

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CapitaLand Ascott Trust (CLAS SP)
ESG bellwether

Highest ESG2.0 score among hospitality REITs
CLAS leads the sector pack with the highest ESG 2.0 score of 69. It is setting the benchmark due to commencement of green leasing and green financing. Further, higher usage of renewable energy and recycled water, improvement in energy and water intensity and superior composition of board has also helped the relative scoring. That said, work place safety and diversity can be improved further. We like CLAS’ diversified portfolio, concentrated longer-stay assets and a strong balance sheet. BUY. 

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CapitaLand Int. Comm. Trust (CICT SP)
Sustainability at the core

Top quartile ESG score
CICT achieved an ESG 2.0 score of 66, which is above average and among the top 3 scorers on our ESG assessment scoring. CICT’s long-term ESG targets are aligned to science-based goals in its sponsor’s 2030 Sustainability Master Plan. The trust is well on its way to achieve its desired environmental targets of reduction in energy, water and carbon emissions intensity. That said, there is room for improvement towards a safer work place and better environmental compliance. CICT is the proxy for Singapore commercial real estate and a beneficiary of reopening as well as resilient domestic consumption. BUY.

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CapitaLand Investment Ltd (CLI SP)
Racing towards net zero

Leading ESG score
CLI achieved an ESG 2.0 score of 68, setting the pace for peers. The real estate investment manager has an established ESG framework, internal policies and measurable targets. From the start of this year, its sustainability effort is now overseen by a full board committee chaired by Lead Independent Director (vs. previous Board sub-committee). In May this year, CLI elevated its commitment to sustainability by aiming to achieve net zero emissions by 2050. The new net zero commitment builds on existing sustainability targets outlined in CapitaLand’s 2030 Sustainability Master Plan. On the business front, CLI will benefit from accelerating growth of funds under management, ongoing RevPAU recovery and higher fee-related earnings. Maintain BUY. 

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