| UOB KAYHIAN |
UOB KAYHIAN |
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Singapore Telecommunications (ST SP) Positive Development From Down Under, On Track For ROIC Expansion
Following an appeal, Australia’s Competition Tribunal has ruled against the proposed Telstra-TPG network-sharing deal, a positive development for wholly-owned Optus. Separately, Telkomsel’s convergence with Indihome is expected to be completed by 1 Jul 23 and upselling activities are expected to lead to earnings accretion over 3-5 years. Singapore Consumer and Optus are expected to benefit from a ramp-up in international tourists. Maintain BUY with a target price of S$3.15.
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Commodities – China Weekly: Central Banks’ Hawkish Stance Outweighs Heightening Geopolitical Risks
The hawkish tones of major central banks have outweighed the heightening geopolitical uncertainty given the slight uptick in gold prices on 26 June. The recent rally of steel prices has started to lose steam, and SGX iron ore futures have reversed down by 3.8% wow. Steel production continued expanding given improved profitability, but CISA’s data indicated that steel mills’ inventory is expanding. Cement prices fell further with inventory build-up continuing. We are cautious on the potential risk of power rationing.
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MAYBANK KIM ENG |
MAYBANK KIM ENG |
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ESR-LOGOS REIT (EREIT SP) One step closer
Execution on divestments; trim TP, maintain BUY ESR-LOGOS divested 7 non-core assets at a valuation of SGD337m, representing a 4.5% discount to book value. We see the divestment as the first concrete step in its capital recycling plan, following its SGD300m EFR completed in April. While EREIT has another SGD113m worth of assets on its book identified for sale, the divestment lifts its headroom to SGD996m. We expect EREIT to shift its focus from divestment to execution on potential acquisition/redevelopment as rates stabilise. We cut our FY23E DPU by c.2.5% and DDM-based TP by 5% to SGD0.37 to factor in lower earnings due to divestment. Dividend yield is attractive at 8%. Retain BUY
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Dyna-Mac (DMHL SP) Invest ASEAN 2023: Key Takeaways
Maintain BUY with an unchanged TP of SGD0.40 We hosted Dyna-Mac at our Invest ASEAN 2023 conference last week. Management is focusing on its yard expansion plan and remains confident of leasing land near its current facilities by the end of 2023, potentially expanding capacity by 30-40% as it is currently close to full utilisation. It is also exploring M&A opportunities and hopes to acquire similar industry businesses with recurring revenues. We remain confident of Dyna-Mac’s outlook and maintain BUY. Its valuation at 20.2x FY23E P/E is undemanding vs 28.6x for global peers.
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| LIM & TAN | LIM & TAN |
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We highlight the key points from the FY23 annual report of SingTel (S$2.48, down 2 cents) which was just released this morning, where Chairman Mr LeeTheng Kiat and CEO Mr Yuen Kuan Moon both commented that “It has been a year of recovery and progress despite uncertainties in the macroeconomic environment.” “The lifting of travel restrictions around the world sounded an official end to COVID-19 and its profound disruptions. This set the scene for a broadbased economic recovery and the return of international travel. Against this backdrop, our business has come back strong, while we pivoted assertively into new areas of growth, as economies continue to undergo rapid digitalisation. Our FY2023 net profit grew 14% to S$2.23 billion, allowing us to make a total dividend payout of 14.9 cents per share.” At $2.48, market cap of SingTel is S$40.9bln, FY24F P/E is 15.9x, current P/B is 1.6x, FY24F dividend yield is 5% and its present net debt position of S$8.3bln equates to net gearing of 33.2%. With earnings growth expected for SingTel this year where we are anticipating its underlying net profit to improve by 25.6% yoy to reach S$2,578mln in FY24F and given that its dividend yield also appears attractive, we are thus maintaining our BUY recommendation on SingTel.
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ComfortDelGro Corporation Limited ($1.17, unchanged) and Guangzhou Public Transport Group (GZPTG) have entered into a strategic partnership to develop and promote transport-related green energy businesses. Leveraging each other’s expertise in transportation and sustainable energy solutions, the two companies are collaborating to invest, build and operate green energy projects. This will include investments in the construction of automotive electric charging and swapping stations and ancillary solar photovoltaic and energy storage systems to support the charging and swapping business. For a start, their initial joint project will deliver 60 chargers with 3,600kw capacity to cater to the needs of municipal buses and cars in Guangzhou, China. At $1.17, ComfortDelgro is capitalized at $2.5 billion and has had a nice bounce from its $1.01 nadir at the end of May’23. Trading at 14x PE, 4-5% dividend yield, 1x book and possibly providing a potential 15% upside to consensus target price of $1.34, we maintain an “Accumulate” rating ComfortDelgro. |
