ANALYSTS SAY: Buy, Sell, Hold (28 Dec)

LIM & TAN

Aurelius Technologies (ATECH MK)

3QCY23: Bright spots in the inflating orderbook

No direct comparison to our forecasts on FYE change ATECH has shifted its fiscal year-end to Dec (FY0) from Jan (FY+1) (refer to footnotes). We adjust our forecasts accordingly, and trim our target price by 3% to MYR3.05 (20x PER CY25E) from MYR3.13 (20x PER CY24E). Our PER is 20% above the sector's historical average, reflecting ATECH's competitive edge with increasing exposure to high growth IoT and EV, and it stands to gain from growth in these sectors. Additionally, ATECH is poised to benefit from supply chain diversification and local E&E FDIs, moving up the value chain. BUY. 

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The Business Times reported that ComfortDelGro ($1.38. unchanged) will increase its commissions from cabbies to 7 per cent from 5 per cent from Jan 1, 2024.

This will be applicable to app and phone-booked rides. The hike was reported by Chinese language daily Lianhe Zaobao on Dec 26 and follows a fare increase and extended surcharge hours aimed at helping taxi drivers defray higher operating costs. ComfortDelGro said the revised fares and surcharge hours will contribute to higher earnings for drivers.

We view the commission increase as positive for ComfortDelgro as it would help mitigate inflationary cost pressures for CDG. Even though commissions were raised from 5% to 7%, we note that it is still lower than what other private hire companies are charging (Grab:20%). As such, CDG still has the capacity to increase commissions even further in the future and grow their taxi business, which has traditionally contributed significantly to CDG’s bottom line pre-pandemic. We thus continue to recommend an Accumulate on ComfortDelGro.

 OCBC

Given the lingering macro uncertainties, we favour a selective approach and prefer quality healthcare companies with positive risk reward propositions that include solid product pipelines, company specific catalysts and supportive valuations. Within our coverage, we see long-term growth prospects in CSPC Pharmaceutical (1093 HK; FV: HKD8.77; one of the leading pharmas with strong innovative strength), Sinopharm (1099 HK; FV: HKD25; largest distributor of pharmaceutical and healthcare products in China); Wuxi Apptec (2359 HK; FV: HKD124.7; a global leader in CRDMO, riding the wave of pharmaceutical outsourcing).

• Marketing activities and hospital procurement were disrupted in 3Q23 but the impact from the anti-corruption campaign appears to be largely manageable
• Some lingering pressures in 4Q23 but likely to see a broader recovery and normalisation of sales in 2024
• Market focus will shift from the probe back to long-term structural growth drivers