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Singapore Telecommunications (ST SP)
On Stronger Footing As The Group Focuses On Improving ROICs
Singtel provided updates on its business segments which face favourable tailwinds in 2023. With this and price increases in Jan 23, Singapore consumer is set to experience higher data roaming revenue from China’s reopening. Optus is back to customer net adds after its data security breach incident in 2022. With the worst of COVID-19 over, Singtel’s regional associates have benefitted from overall price repair and rational competition. Maintain BUY with the same target price of S$3.15.
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Top Glove (TOPG MK)
2QFY23: Worst Is Over
Earnings disappointed as operational earnings fell into losses. Off softened ASPs, input costs were generally higher. Positively, ASPs across the industry are expected to pick up considerably in the subsequent quarter. The bottoming of operating margins should elevate sentiment and downside risk. With this and the gradual recovery in earnings beyond FY23, we believe the reward-to-risk is now favourable for Top Glove. Upgrade to BUY with a higher target price of RM0.95.
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Ping An Insurance Group (2318 HK)
2022: Results Below Expectations; Expect 1Q23 NBV To Turn Positive
Ping An's 2022 results missed our expectations due to the challenging macroeconomic
conditions. However, the positive impact from its life insurance reform has started to take effect, resulting in a positive growth in life NBV in Feb 23, which continued into Mar 23. Management expects positive NBV growth for 1Q23 and 2023. Management announced an annual dividend of Rmb2.42 per share. We maintain our BUY rating but cut target price to HK$67.50 as we trim our 2023/24 net profit.
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ST Engineering
Margins at inflection point
■ We hosted STE’s management in KL last week. STE remains as one of our country top picks for its 23% FY23F EPS growth vs. Singapore’s 16%.
■ Our EPS growth is premised on margin recovery with +120bp in EBIT margin to 9.4% for FY23F, back to the pre-Covid level of FY19 (9.3%).
■ STE trades at 18x/15x CY23F/CY24F P/E or at -1 s.d from its 15-yr average; we think this is due to its current high net gearing of 2x (from prev. sub-50%).
■ Earnings accretion from Transcore in 2H23F is a key re-rating catalyst. Maintain Add and TP of S$4.00.
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CK Asset Holdings Limited
Speeding up land bank replenishment in HK
■ CKA’s 4% yoy increase in core EPS in FY22 was driven by asset disposal and share buyback.
■ We believe its hotel and pub operations will be key drivers to OP growth in FY23F, given the low base in FY22 due to the pandemic.
■ We estimate that its 7.6m sf of land bank GFA acquired in HK in FY18-22 should be sufficient for its sales pipeline for the next four years.
■ Reiterate Add with an unchanged TP of HK$59.2 (45% discount to NAV).
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Manulife US REIT (US$0.27, unchanged) - Mirae Asset Global Investments Co. has been tapped as the preferred bidder to buy a real estate investment trust listed in Singapore, a move that will help the South Korean asset management company expand its overseas presence. According to multiple sources from the investment bank industry on Tuesday, Mirae Asset has been selected as the preferred bidder for the acquisition of Manulife US Real Estate Management Pte., beating four to five other candidates in the race.
“Mirae Asset was picked as the preferred bidder on a term that it will buy the REIT manager for roughly 200 billion won ($153.6 million) and purchase
part of a stake in the REIT,” said an unnamed industry official.
Manulife US REIT’s market cap stands at US$470.8 mln and currently trades at 0.5x PB, with a forward dividend yield of 15.9%. Consensus target price stands at S$0.51, representing 88.9% upside from current share price.
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