buysellhold july.23



Boustead Singapore Ltd

Firing on all cylinders


■ Strong earnings recovery in 1HFY24, with core PATMI at S$26m (+44% hoh, +90% yoy); all three core segments showed hoh and yoy revenue growth.

■ We expect FY24F earnings will be driven by the strong order win momentum at its energy engineering unit, and increased stake in Boustead Projects.

■ We continue to expect solid earnings growth in FY24F (core PATMI +60% yoy) for BOCS. Reiterate Add with TP of S$1.40.



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Singapore Strategy

Nov 23 wrap-up: Singapore in 5


■ The FSSTI closed Nov 23 at 3,072.99 pts, up 5.25 pts (0.2%) mom.

■ A decent 3Q23 earnings season, despite persistent economic data gloom.

■ Our end-FY23F FSSTI target remains unchanged at 3,350 pts (10.5x CY23F core market EPS).


Data gloom continues, official NODX forecast revised downwards



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Hong Leong Bank

NIM shielded by low LD ratio


■ HLB’s 1QFY6/24 net profit (NP) was within expectations, at 26% of our fullyear forecast and 25% of the Bloomberg consensus estimate.

■ HLB managed to maintain its NIM over the past two quarters as it capitalised on its low LD ratio to grow its loans at a faster pace than its deposits.

■ Reiterate Add, given its above-industry loan growth and swift expansion of BOC contributions. 



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CIMB Group Holdings (CIMB MK)

3Q23 results above expectations


BUY maintained CIMB’s 3Q23 earnings were above expectations, and we have raised FY23- 24E earnings by 2-5%. Our FY23E ROE of 10.2% is at the lower end of management’s target of 10.2-11%. Our TP is raised to MYR6.70 (+20sen), on an unchanged FY24E PBV of 1x, supported by a FY24E ROE of 10.2%.



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Manulife US REIT (US$0.052, down 3.9 cents) has announced a holistic funding plan put together to revitalise and reinforce the REIT. The Manager had in July 2023 announced that its first-half 2023 (“1H 2023”) portfolio valuations had declined by 14.6%, or US$279.95 million, to US$1,633.55 million. This resulted in the REIT breaching a financial covenant in the Existing Facilities requiring the percentage of its consolidated total unencumbered debt to consolidated total unencumbered assets (“Unencumbered Gearing”) to be not more than 60%.

In view of the continued headwinds in the U.S. office sector, the Recapitalisation Plan provides the Manager with a substantial runway of approximately 19 months until June 2025 to execute the sale of the Existing Properties, while the relaxation of financial covenants up until end-2025 also allows the Manager to fully focus on optimising its portfolio during this period.

MUST’s market cap stands at US$92.4mln at currently trades at distressed levels of 0.1x P/B, with a halt in distributions until FY26. The Recapitalisation Plan will provide greater clarity on what is needed for the REIT to return back to financial stability. While the debt restructuring plan is a welcomed one, the 10% interest on the sponsor-lender loan is relatively high and may weigh on distributions until FY29. Given the suspension of distributions until FY26, dividends-focused investors looking for yield are better placed to look elsewhere.





Malaysia Oil & Gas

PETRONAS hints at sizeable capex in 2024E


Maintain POSITIVE on Malaysia O&G Sector Our general thesis on the Malaysia Oil and Gas sector has not changed much since our previous report. As EIA has forecasted a record-high demand for oil in 2023-2024E, we think that the elevated crude oil price environment will stay for the medium-term. We maintain our POSITIVE stance on the sector with in-house Brent ASP assumptions of USD85/80/bbl for 2023/2024E. Top sector BUYs are Yinson, Velesto and Wasco.



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