MAYBANK KIM ENG

Offshore Marine – Singapore
2023: Building On The Strength Seen In 2022, We Expect A Strong Year Ahead

In 2023, we expect the global rig market to continue the strength seen in 2022 with higher utilisation and day rates. The oil & gas industry is forecast to see double-digit capex growth over 2023-24. While some of this capex increase is inflation related, we point out that there are over 180 offshore projects that will require floating production and or storage systems which would benefit our top picks SMM and KEP. Our sector rating remains OVERWEIGHT.

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Singapore Banks
4Q22: What to expect

High margins, low NPLs, but more cautious guidance
DBS is set to report 4Q22 on 13 Feb, UOB 23 Feb and OCBC 24 Feb. NIMs are set for further acceleration riding on Fed rate hike tailwinds. Concurrently, we expect to see higher funding costs setting the stage for this momentum to taper in 2023E. NOII is unlikely to see turnaround squeezed between seasonally slow wealth management and slowing loan growth. We believe asset quality should continue to remain robust, especially supported by China’s re-opening. However, expect increasingly cautious guidance around credit costs and asset quality from Management. With CET1 levels and provisioning coverage levels high, risk of upside surprise exists for DBS and UOB for special dividend announcements.

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CGS CIMB

Starhill Global REIT
Strong price performance capping upside

■ 1HFY6/23 DPU of 1.82 Scts (+2.2% yoy) came in at 45.8% of our FY23F, which we deem as in line. Portfolio occupancy was stable qoq at 97.1%.
■ Credit metric was healthy; adjusted ICR improved qoq from 3.2x to 3.6x while gearing was stable at 36.3%.
■ We raise our DDM-based TP from S$0.58 to S$0.62 on better retail and SG office outlook but downgrade to Hold on strong price performance.

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Frasers Centrepoint Trust
Reigniting the acquisition dream

■ Retail occupancy rose qoq from 97.5% to 98.4%; 1Q saw positive reversion.
■ Acquisition of 25.5% stake in NEX renews FCT’s inorganic growth prospects.
■ Reiterate Add. Suburban retail malls will remain resilient, in our view. 

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Parkway Life REIT
Another resilient set of results

■ 2H/FY22 DPU of 7.32/14.38 Scts, broadly in line at 51.6%/101.4% of our FY22F forecast.
■ Better operating performance more than offset higher funding cost.
■ Maintain Hold rating with a lower TP of S$4.78. 

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Keppel Infrastructure Trust ($0.57, up 0.5 cent) delivered a 15.8% YoY increase in Distributable Income to $222.5 million in FY 2022, supported by new acquisitons, steady porƞ olio performance and another record year at Ixom. Accordingly, the Trust declared higher Distribution per Unit (DPU) of 3.82 cents for FY 2022, a 1% increase YoY, translating to a distribuƟ on yield of 7.1% based on KIT’s closing price of $0.540 as at 31 December 2022. 

KIT’s market cap stands at S$2.9 bln and currently trades at 1.9x PB with a yield of 6.7%. Consensus target price stands at S$0.62, representing 8.8% upside from current share price. “HOLD”.