buysellhold july.23




Top clients remain a drag


 3Q23 revenue was in line with expectations.Earnings were better-than-expected, helped by lower employee expenses, lower taxes, and higher interest income. PATMI increased 2% YoY as a result. 9M23 revenue/PATMI were at 75%/91% of our FY23e forecasts.

 Revenue decline of 21% YoY from the top 2 clients was a drag, offset by strong growth from smaller clients across verticals like travel, gaming, FMCG, and e-commerce.



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Frencken Group (FRKN SP)

3Q23: Results In Line; Sequential Recovery Trend Continues


Frencken’s 3Q23 earnings of S$7m (-30% yoy/+3% qoq) were in line with expectations, with 9M23 earnings accounting for 74% of our full-year estimate. 3Q23 revenue grew 3% qoq but fell 6% yoy as all segments saw revenue declines, except for medical (+20% yoy) and analytical & life sciences (+22% yoy). Frencken expects stable revenue in 2H23 vs 1H23 and will continue focusing on its programmes for customers to ensure it is well-positioned to recover. Maintain BUY. Target: S$1.23.



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Thai Travel & Leisure - Overall Key messages from TAT

Stay sector Overweight, with ERW as our top pick Despite some industry headwinds, we still expect a 19% yoy increase in the number of tourist arrivals in 2024F, which we think is still respectable.

As such, we stay sector Overweight, with ERW (Add, TP: THB5.70, CP: 5.50) as our top pick because it focuses mainly on the hotel business, which is going into high seasons in 4Q23-1Q24F. Downside risks for our sector call: a weaker global economy and weaker tourist arrivals. Catalysts: a strong surge in Chinese tourists and stronger global economic outlook in 2024F.





Kuala Lumpur Kepong (KLK MK)

FY23: Below Expectations

KLK’s 4QFY23 results came in below our expectations, mainly due to higher-thanexpected investment holdings losses and lower-than-expected CPO ASP. Earnings improved significantly qoq due to an improvement in the plantation segment’s operating margin, but this was partially offset by higher losses from the manufacturing segment. We expect a strong earnings improvement with lower production costs and higher CPO ASP for FY24. Maintain BUY with a target price of RM25.90.



Malayan Banking Bhd

NP growth not deterred by NIM contraction


■ Maybank’s 9MFY23 net profit (NP) was within expectations, accounting for 72% of our full-year forecast and 75% of Bloomberg consensus’ estimate.

■ We project a 13.1% qoq growth in 4Q23 NP, on the back of stronger contributions from insurance business and stable credit costs.

■ Reiterate Add, premised on potential write-back of management overlay and capital management initiatives to enhance dividend yield and ROE.



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