ANALYSTS SAY: Buy, Sell, Hold (12 Jan)

CGS CIMB

Singapore Post Ltd
Raising stake in Australia subsidiary FMH

■ SPOST to raise its stake in FMH from 51% to 88%. A$175m consideration is based on 9.6x trailing EBITDA. We estimate 8% OP accretion to FY3/24F.
■ We are positive on the acquisition as it ties with SPOST’s strategic direction, and enables faster growth in Australia through synergies and further M&As.
■ Reiterate Hold with a TP of S$0.55 due to near-term headwinds

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Alliance Bank Malaysia Berhad
Refreshed strategic plans under new CEO

■ We see Alliance Bank’s target for 8-10% loan growth in the next few years as challenging as this would be significantly above the industry’s rate of 4-5%.
■ However, we think that its long-term ROE target of above 11% is achievable. We project ROE of 11-12% in FY3/23-25F.
■ Despite the positive impact from OPR hikes, we retain our Hold call as we expect an upturn in Alliance Bank’s LLP in the coming quarters. 

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UOB KAYHIAN

Civmec (CVL SP)
Major Contract Win From Rio Tinto

Civmec has secured a major contract worth over A$330m for the Rio Tinto Western Range Project in Western Australia. The iron ore project will commence off-site works immediately, while mobilisation to site will start in mid-23 and is expected to complete in 1HFY25. The latest orderbook has increased 23% to A$1.15b, from A$935m as of 1QFY23. We raise our FY23 and FY24 EPS by 3% and 6%. Our target price fell 7% to S$1.10 after adjusting for a lower PE multiple based on -1SD to mean PE. Maintain BUY.

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Swift Haulage (SWIFT MK)
Uncertain Outlook Ahead, But Fundamentals Remain Intact

Swift is expected to deliver a better growth in 2023, supported by its continuous warehouse expansion plan, long-term prospects of the GVL project, and China’s border reopening. Volume growth could still face risks, depending on the global recession risk, and the imposition of a 10% sales tax for imported low-value goods from online purchases in Apr 23. Production ramp-up of PRefChem remains gradual, but this is adequately factored into our forecast. Maintain BUY. Target price: RM0.90.

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Alliance Bank (ABMB MK)
ACCELER8 2027

BUY maintained
ABMB has unveiled its 5-year business plan to 2027, which is dubbed ACCELER8. Among its targets to investors is to deliver a top quartile ROE among peers of >11%, which we think is quite achievable if growth momentum is sustained. Moreover, there are sufficient pre-emptive provisions that have been built up, that could be released over time to support earnings growth. We maintain a BUY on the stock with an unchanged TP of MYR4.50 (PBV of 1x, CY23E ROE of 10.2%).

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Aurelius Technologies (ATECH MK)
Next growth trajectory from new customers secured

Maintain BUY with TP of MYR2.40
We maintain our BUY call, forecasts, and TP of MYR2.40 for ATECH, by pegging our CY23E EPS of 15.9sen to the industry’s 5Y historical average PER of 15.1x. We like ATECH for (i) its robust earnings growth prospects (supported by its ongoing expansion for Customer F and continuous new customers acquisition); (ii) growing exposure to higher value-added multicomponent integrated circuits (MCICs); as well as (iii) its business resiliency from recession, having exposure in the fast-growing industry such as IoT related products and the automotive industry, where growth is believed to be relatively sticky despite the recession slowdown fears.

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