buysellhold july.23



Suntec REIT

Resilient performance hampered by rising interest rates


 3Q23 results were within expectations. Gross revenue grew 15% YoY to S$123.4m and NPI increased by 9.7% YoY to S$84.6m.Over the past three quarters, results have been 79.7%/77.9% of our FY23e forecast, respectively.

 3Q23 DPU declined by 14% YoY to 1.793 Singapore cents, and when considering 1H DPU, it was 76.3% of the FY23e forecast. Strong operating performance was offset by higher financing cost, FX fluctuation, and higher maintenance fund contribution.

 We maintain BUY with an unchanged DDM-TP of S$ 1.47.No change to our forecasts. We expect Singapore market to be the key revenue driver with double-digit rental reversion for the retail side to continue and high single-digit for office sector in FY24e. The current share price implies FY23e/24e DPU yields of 6.08%/7.16%.



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Suntec REIT

Focusing on capital management


■ 3Q23 DPU of 1.793Scts was within expectations, at 25.3% of our FY23F forecast. 9M23 DPU formed 74.3% of our full-year forecast.

■ Singapore office and retail segments continued to be star performers in 3Q.

■ Reiterate Hold, with a lower DDM-based TP of S$1.25. 



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Hana Microelectronics

Multiple tailwinds to drive OP growth


■ We expect Hana’s 2H23F core net profit to rise 37% hoh, on the back of a 10% hoh increase in sales and strong GPM tailwinds from a weak THB/US$.

■ While we see lower-than-expected Powermaster sales and output in the next 6 months, we believe its long-term growth trajectory remains intact.



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Suntec REIT (SUN SP)

Battling higher rates


Trimming price target on higher cost of equity SUN reported 3Q DPU of SGD1.793c, +3.1% QoQ, -14% YoY. 9MYTD DPU of 5.269c fell 23.6% YoY and was 76.6% of our FY est. Top-line growth was anchored by accelerated recovery of the convention business. However, higher interest cost and lower margins moderated distribution. Unlike overseas assets, Singapore occupancy was steady while reversions strengthened for office and retail. Divestment continues albeit at a slow pace. With continued risk of lower asset values and higher funding cost, we maintain HOLD and lower our DDM-based TP to SGD1.15. 



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 New World Development
Plans to deleverage in place

■ The offer price for NWD’s holding of NWS shares is equivalent to 15x FY23 DPS of NWS, management said at a post-results NDR this week.

■ Management also projects a lower capex of HK$15bn in FY6/24F, as a few IP projects approach completion.

■ NWD will tap more Rmb fixed rate borrowings as one of the ways to actively manage its borrowing cost and match its asset exposure in China.

■ Reiterate Add with an unchanged TP of HK$19.3 (60% discount to NAV).

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