buysellhold july.23



China Aviation Oil (Singapore)

Lift-off in international flights


 International passenger traffic in China is up 18 fold YTD September 2023 and only 33% of pre-pandemic levels. We expect international travel volume recovery to gain pace in FY24e, fuelling demand for jet fuel at international airports.

 China’s jet fuel consumption has risen by CAGR of 8.4% over the last 10 years. More airports have been added over the years to cope with the rise in air travel demand. We think CAO could potentially expand its footprint to international airports in other Chinese cities.

 We initiate coverage with a BUY recommendation and discounted cash flow TP of S$1.01. We expect earnings to double over the next two years and around 64% of the market cap is in net cash of US$308mn (as at end 2022).



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United Overseas Bank Limited

NIM growth stagnates while fee income recovers


 3Q23 adjusted earnings of S$1,479mn were slightly above our estimates due to higher fee income and higher NII offset by lower-than-expected other non-interest income growth and higher allowances. 9M23 adjusted PATMI was 77% of our FY23e forecast.

 Positives include NII growth of 9% YoY and fee income rising by 14% YoY, while negatives were the flat other non-interest income growth and allowances increasing 12% YoY. Management has maintained its FY23e guidance, while providing FY24e guidance of mid-single digit loan growth from a growing customer franchise and focus on high-quality customers, NIM to remain at current levels as funding costs have stabilised and expectations for rates to maintain till 2H24, double-digit fee income growth from the Citi acquisition, stable cost-to-income ratio and credit cost at around 25-30bps. 



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Sheng Siong Group Ltd

Same-store sales inching up


 3Q23 results were within expectations. 9M23 revenue and PATMI were 75%/74% of our FY23e forecast. Despite, the spike in salaries and electricity cost, PATMI grew 6% YoY on improving gross margins and interest income.

 Same-store sales in 3Q23 grew 1.8% YoY, inching up from 2Q23 by 1.5%. We believe the improvement is from market share gains. Visible promotions in the community and a reputation as a cost leader helped push revenue growth. 



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Mapletree Pan Asia Commercial Trust

Valuations turning attractive


■ 2Q/1H DPU of 2.24/4.42 Scts (-8.2%/-10.5% yoy) was in line at 25.9%/51.1% of our FY24F as forex and higher financing cost wiped out revenue growth.

■ Positive reversions and high occupancy but watching backfilling and gearing.

■ We think MPACT is at an inflection point. Upgrade from Hold to Add; P/BV of 0.74x at -2.7 s.d. from 5-year historical average



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CapitaLand Integrated Commercial

Cautious optimism


■ 3Q revenue of S$391.3m was in line with expectations at 26% of our FY23F forecast.

■ Portfolio committed occupancy rose to 97.3% while retail/office rental reversions remained positive in 3Q.

■ Reiterate an Add rating with a lower TP of S$2.17. 



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iFAST Corporation Ltd

ePension contributions commencing


■ ePension contributions started in 3Q23, kickstarting seven years of project fees to come. We raise our FY23-25F ePension assumptions to reflect this.

■ Underlying business was steady. AUA growth was positive, but mild, in 3Q23.

■ Reiterate Hold with higher TP of S$5.90. We think that ePension earnings have been priced in. Risk-off momentum is still a drag on trading volumes.



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