ANALYSTS SAY: Buy, Sell, Hold (21 Dec)

LIM & TAN

SIA Engineering ($2.32, down 2 cents) refers to its announcement of 5 April 2022 in relation to a non-binding Memorandum of Understanding with Impeccable Vintage Properties Sdn Bhd (“IVP”), a wholly owned subsidiary of Malaysia’s sovereign wealth fund Khazanah Nasional Berhad, to potentially lease two hangars at Sultan Abdul Aziz Shah Airport, Selangor, Malaysia.

The transaction is not expected to have a material impact on the net tangible assets per share or the earnings per share of the SIAEC Group for the financial year ending 31 March 2024. None of the Directors and controlling shareholders of SIAEC has any interest, direct or indirect, in the transaction, other than through their shareholdings (if any) in SIAEC.

SIA Engineering’s market cap stands at $2.6bln and presently trades at trailing 12-mth PE of 28.2x and current PB of 1.6x, with a dividend yield of 3.2%. Consensus target price stands at S$2.68, representing 15.5% upside from current share price.

Coliwoo, a co-living subsidiary brand under real estate management services group, LHN Limited / LHN ($0.325, down 0.005), has recently unveiled its latest property – Coliwoo Hotel Pasir Panjang – the newest addition to the brand’s portfolio that now sees 15 properties launched islandwide.

Strategically located at 404 Pasir Panjang Road, the co-living hotel opens plentiful possibilities for a close-knit community – among students, researchers and lecturers from National University of Singapore, Curtin University and S P Jain. Also catering to other working professionals, the property is just a short drive from Mapletree Business City, Science Park and even the Central Business District, all accessible along the stretch from Ayer Rajah Expressway, West Coast Highway to Keppel Viaduct.

At 32.5 cents, LHN is capitalized at $130million and trades at undemanding core PE ratio of between 4-5x forward earnings and yields an attractive 9.2% dividend yield (1 cent interim, 1 cent final and 1 cent special dividend). Price to book is also undemanding at 0.6x while Bloomberg consensus target price is between 45- 50 cents. We maintain an “Accumulate” rating on LHN given its undemanding valuations. Catalysts include sale of non-core assets such as Golden-Mile car park, Food-Factory and payment of better dividends as core earnings improve on the back of better performance of its co-living business.

MAYBANK KE

Top Glove (TOPG MK)
Positives more than priced in

On the road to recovery TOPG’s 1QFY24 core net loss of MYR56m (versus core net loss of MYR131m/89m in 1QFY23/4QFY23) was in line with our expectation. We maintain our loss projection for FY24 and expect TOPG to only turnaround in FY25.

While we appreciate TOPG for its active cost management, improving sales outlook and projected turnaround by FY25, the share price has outpaced fundamentals and is now 13% above our MYR0.80 TP (on 1.4x CY25E PBV peg). We downgrade TOPG to SELL (from HOLD). 

Malaysia Oil & Gas

PETRONAS Activity Outlook (PAO) 2024-2026

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 2023-2025E, we think that the elevated crude oil price environment will be here to stay in the medium term. We maintain our POSITIVE stance on the sector with an in-house Brent Oil Price assumption of USD80/bbl for 2024E. Top sector BUYs are Yinson, Velesto and Wasco.

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