ANALYSTS SAY: Buy, Sell, Hold (6 Feb)

UOB KAYHIAN

STRATEGY – SINGAPORE
Alpha Picks: Adding YZJ, CVL, FEH While Removing CLI, VMS, UMSH, SIA.

In Jan 23, our Alpha Picks portfolio bettered the STI by 2.2ppt on an equal-weighted basis. For Feb 23, we have included companies with robust earnings growth and strong order wins, such as YZJ, Civmec and Food Empire. In addition, we have taken profit on CapitaLand Investment, SIA, UMS and Venture. We also highlight that our Alpha Picks portfolio has beaten the STI in 11 out of the past 12 months. 

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SECTOR UPDATE
REITs – Singapore
3QFY23: MPACT (In Line) And 1QFY23: FLT (In Line)

MPACT benefitted from full quarter contribution from merger with MNACT and NPI from VivoCity increased 23% yoy in 3QFY23. FLT achieved strong positive rental reversion of 2.8% (incoming vs outgoing) and 11.0% (average vs average) and maintained full occupancy of 100% for logistics properties across Australia, Europe and the UK in 1QFY23. BUY MPACT (Target: S$2.02) and FLT (Target: S$1.56). Maintain OVERWEIGHT on S-REITs.

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UOB KAYHIAN

CapitaLand Ascendas REIT (CLAR SP)
2H22: Maintains Positive Rental Reversions And Higher Occupancies

CLAR achieved positive average rent reversion of 8.0% for 4Q22 (Singapore: 6.0% and US: 39%). Portfolio occupancy reached a 10-year high of 94.6%. CLAR has a resilient balance sheet with average debt maturity at 3.7 years. Management plans to scale up in new economy assets, including logistics properties. CLAR provides resilient 2023 distribution yield of 5.1% (MINT: 5.6%). Maintain BUY with a target price of S$3.30.

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Digital Core REIT (DCREIT SP)
2H22: Business And Share Price Turning Around

DCREIT’s 2H22 results were in line with expectations with its 10 data centres maintaining occupancy of 98%. It has completed the acquisition of a 25% interest in a freehold data centre in Frankfurt for US$150m in Dec 22, which is accretive to DPU by 2.0%. Demand for data centre capacity could rise due to increased usage of artificial intelligence. DCREIT provides a distribution yield of 5.7% for 2023F (KDCREIT: 4.9% and MINT: 5.6%). Maintain BUY. Target price: US$0.97. 

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Singapore Banking Monthly
Interest rates growth plateau

SINGAPORE | BANKING & FINANCE | UPDATE
 January’s 3M-SORA was down by 3bps MoM to 3.05%, the first decline since
August 2021.
 Singapore domestic loans dipped 0.30% YoY in December, below our estimates, while Hong Kong’s domestic loans declined 2.99% YoY in
December. CASA balance dipped slightly to 20.4%.
 Our 4Q22e PATMI estimates are: DBS (S$2.02bn); UOB (S$1.59bn) and OCBC (S$2.03bn). We expect bank NIMs to rise another 34bps in 4Q22. Valuations for OCBC are the most attractive and could offer largest upside surprise from dividends.
 Maintain OVERWEIGHT. We remain positive on banks. Bank dividend yields are attractive at 5% with possibleupside surprise due to excess capital ratios and push towards higher ROEs. SGX is another major beneficiary of higher interest rates [SGX SP, BUY, TP S$11.71].

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Nanofilm Technologies Int'l Ltd
Profit guidance: FY22F net profit declined

■ Nanofilm issued a profit guidance yesterday — its FY22F net profit is expected to decline 30% yoy. FY22F results to be released on 21 Feb 2023.
■ We revise down our FY22F forecasts to reflect this profit guidance and cut FY23F expectations further given slowing macroeconomic growth.
■ Reiterate Hold, with an unchanged S$1.39 TP (12.6x FY24F P/E) as we look forward towards a FY24F net profit recovery to pre-Covid levels.

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