buysellhold july.23

MAYBANK KIM ENG

MAYBANK KIM ENG

Malaysia REITs

Growth momentum to continue 2024 outlook

 

We remain NEUTRAL on M-REITs going into 2024, amid sustained occupancy and rental rates, and asset injection to provide the growth. Elsewhile, we expect BNM to pause on interest rate, with the OPR to stay at 3% throughout 2024, providing respite to higher financing cost experienced in 2023. Our top BUY pick is YTLREIT. Other BUYs are PREIT, SENTRAL and AXRB. The sector’s average CY24E net DPU yield of 6.4% is decent.

 

 

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Regional Traders’ Almanac

ASEAN equities: Overall sentiment remains supportive

 

 FTSE ASEAN 40 Index – Short-term uptrend bias intact

 MALAYSIA – Buy Aurelius Technology & Wellcall Holdings

 INDONESIA – Buy Bank Rakyat Indonesia & Ciputra Development

 PHILIPPINES – Buy First Gen Corp. & Manila Water Company

 SINGAPORE – Buy ST Engineering & CSE Global

 THAILAND – Buy Kasikornbank & TTW

 VIETNAM – Buy Duc Giang Chemicals & Binh Minh Plastic

 

 

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LIM & TAN

LIM & TAN

LHN Limited’s (S$0.325, down 0.5 cents) FY23 dividends of 3 S cts (1 c interim + 1 c final + 1 c special) was a positive surprise for us, a robust dividend yield of 9.2%. Excluding the recent disposal of subsidiary LHN Logistics, revenue increased by 10.9% to S$93.6mln, driven by growth in co-living keys and stable occupancy rates

Core profits of S$23.4mln (down 22% yoy) were affected by higher financing costs as LHN repriced some of its loans in a high interest rate environment. LHN launched close to 700 keys in FY23, bringing the total number to 1,681 Coliwoo keys.

LHN’s market cap stands at S$132.9mln and trades at 0.6x P/B. Forward P/E of 5.2x is attractive and is >0.5SD below its mean P/E of 10.0x since IPO. We like LHN’s strong pipeline of projects across all segments, and expect significant growth in the co-living space, backed by a recovering hospitality sector. Maintain Accumulate with a target price of S$0.47, pegged to 7.5x core FY24F P/E.

 

We highlight the key points from Marco Polo Marine’s / MPM (5 cent, up 0.2 c) just released annual report:

We are pleased to report another year of strong performance, as MPM continues its growth momentum in an otherwise highly volatile and uncertain operating environment. We ended FY2023 with yet another set of record EBITDA and net profit numbers. The encouraging results come on the back of an increase in revenue and expansion in gross profit margins. Overall, our financial position has continued to improve, with the Group’s net cash balance holding steady at S$63 million as of 30 September 2023. 

Consensus is bullish on MPM prospects due to the reasons cited in their bullish outlook in their annual report. Consensus has pencilled in net profit growth of 20% over the next 2 years to hit $26 million on the back of the new dry dock 4 and new CSOV contributions. At 5 cents, MPM is capitalized at $188 million and trades at 7.2x forward PE. Based on its just declared maiden dividend of 0.1 cent per share, div yield is 2%. Bloomberg consensus 1 year target price of 6.8 cents, implies a potential capital upside of 36%. “Accumulate”

 

UOB KAYHIAN UOB KAYHIAN

Banks – Regional

ASEAN Banks: Quarterly Update

 

Interest rates have peaked and entered a downcycle. Indonesian banks are the biggest beneficiaries of lower interest rates and have the highest earnings growth in 2024 and 2025. Our top BUYs are OCBC (Target: S$16.85), CIMB (Target: RM6.65), SCB X (Target: Bt124) and BBNI (Target: Rp6,300). Yield plays, such as DBS (Target: S$41.65), RHB (Target: RM6.35), KTB (Target: Bt21.50) and BMRI (Target: Rp6,500), are attractive in an environment of lower bond yields.

 

 

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Plantation – Regional

CPO Prices Set for Gradual Uptrend Amid Supply Tightness

 

The potential supply deficit could support elevated CPO prices in 2024, with marginal production growth in Malaysia offsetting weaknesses in Indonesia and other countries. Global vegoil supply faces constraints due to: a) Indonesia increasing domestic use, b) heightened biofuel usage in key oilseed-producing countries, and c) reduced oilseed crushing. Maintain OVERWEIGHT, and focus on Malaysian plantation companies and companies that have better-than-peers production growth.

 

 

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