buy sell hold 2021




StarHub (STH SP)
On Firm Footing; Frontloading Capex To Drive Future Earnings

Starhub is expected to deliver S$500m in cost savings over 2022-26 under its DARE+ initiative. This entails spending S$310m to drive incremental net profit stack of S$80m from 2026 onwards – suggesting a robust three-year earnings CAGR of 15% over 2023-26. Given the hefty share price correction ytd, we upgrade the stock from HOLD to BUY with a target price of S$1.30. The stock currently trades at -2SD below its mean EV/EBITDA of 7x. Market consolidation is a key re-rating catalyst.


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Bermaz Auto (BAUTO MK)
1HFY23: Above Expectations; Strong Sales To Last Till 2HFY23

1HFY23 core net profit of RM115.8m exceeded expectations, with earnings expected to be maintained in 2HFY23. BAUTO recorded higher-than-expected earnings due to stronger sales volume and improvement in EBIT margin for its Mazda (higher CKD vehicle) alongside a stronger ringgit against the yen. Booking rate remained healthy, topping 10,000 units as at end-Nov 22. Raise FY23-25 earnings forecasts by 7-10% to account for higher car selling prices. Maintain HOLD. Target price: RM2.06.


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StarHub Limited
More DARE, less PLUS until FY24


 Under StarHub’s DARE+ transformation (2022-26) to reduce cost and create new revenue streams, S$310mn of investments are required from FY22-24e. Around S$75mn has been spent with the bulk (est. S$150mn) to be spent in FY23e.


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Sapura Energy (SAPE MK)
3QFY23: Weak Quarter; Reset Plans Ongoing

SAPE’s core loss is deemed in line, as we expect stronger 4QFY23 revenue and drilling income. For investors assessing the new government’s policies, we believe the new management team is doing its best to reset the group’s financial conditions on its own without further government intervention. Hence, we do not see the latter happening as a near-term event, but may be a longer-term possibility if our FY24-25 forecasts are at major risks of downgrades. Maintain HOLD. Target price: RM0.05.


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Property Devt & Invt
Ramping up residential land supply

■ New residential units under the Confirmed List in the GLS programme increased to 4,090 units for 1H23, from 3,505 units in 2H22.
■ The increase in residential supply is likely to enable developers to replenish their landbank.
■ Reiterate sector Overweight on valuations. Preferred picks: CIT, CLI, UOL.


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Outlook may remain weak in 2023F

■ Reiterate Underweight on the Malaysian petrochemical sector, with Reduce calls for both LCT and PCG, as price dynamics remain under pressure.
■ Between the two, we prefer PCG as it enjoys preferential feedstock costs and exposure to the historically-strong urea pricing. 


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