buysellhold july.23



Singapore REITs Monthly: Jan24 Hit by higher financing costs


▪ The S-REITs Index fell 4.4% in January after gaining 8.9% in December. The top performer for the month was Frasers Centrepoint Trust (FCT SP, ACCUMULATE, TP S$2.38). It gained 1.8% after commendable results and the proposed acquisition of a further 24.5% stake in NEX. The worst performer was Prime US REIT (PRIME SP, BUY, TP US$0.37) - it fell 30.4% after gaining 95.1% the month earlier, due to portfolio valuation and gearing concerns. The retail sub-sector was the outperformer in January, gaining 0.3%, lifted by FCT. The worst performing sub-sector was overseas commercial. It fell 13.2% after gaining 39.7% in December, dragged down by Singapore-listed US office REITs.



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Singapore Banking Monthly

Loans and interest rates dip further


▪ January’s 3M-SORA was down 5bps MoM to 3.69% and was 5bps lower than the 4Q23 average. This is the largest MoM decline since July 2020. 3M-HIBOR was down 55bps MoM to 4.82%, the largest MoM decline since January 2023. 



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Silverlake Axis Ltd

Quality of earnings improving


▪ 2QFY24 earnings of RM39.8mn met our estimates. 1HFY24 earnings were at 49% of our FY24e. The 5% YoY dip in earnings came from lower-than-expected non-recurring revenue and higher-than-expected OPEX. 



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Frencken Group (FRKN SP)

Positive Recovery Signs From Key Customers; Raise Target Price By 34% To S$1.65


We expect Frencken to report 4Q23 earnings of S$7m (-52% yoy/+0% qoq). Its recent positive results and the outlook of its semiconductor customers ASML and AMAT indicate that demand for semiconductor equipment is expected to improve in 2024, driven by strong order wins and higher PC, cloud and AI data centre spendings. These are positive for Frencken, as it derives one-third of its revenue from the semiconductor segment. Maintain BUY with a 34% higher target price of S$1.65.



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Frencken Group Ltd (FRKN SP)

Strengthening recovery


Maintain BUY with a higher TP of SGD1.61 Frencken is slated to report 4Q23 results on 27 Feb 2024 after trading hours. We expect 4Q23 to show gradual improvement QoQ with FY23 revenues at SGD723m and NPAT at SGD25m. However, it’s key customer Applied Materials (AMAT) just reported a stellar 1Q24 result and lifted its 2Q24E earnings outlook. We now expect inventory levels to be drawn down at a faster pace. In addition, Frencken subsidiary ETLA is one of the 12 suppliers globally that won AMAT’s best in class performance award for 2023. We believe Frencken will be a key beneficiary of AMAT’s production shift to Southeast Asia (SEA) via new projects and volumes. We remain bullish on Frencken in this semi-con recovery and lift our TP to SGD1.61, based on 14x FY24E from 12x FY24E previously as we are now more certain of its recovery trajectory.


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Seatrium ($0.093, up 0.7 cent) announced that it has received notification from TenneT TSO B.V. (TenneT) that it plans to commence work on the third 2-gigawatt (GW) High Voltage Direct Current (HVDC) electrical transmission system on 1 June 2024


With the exception of last Friday, Seatrium’s share plunged 21% before recovering 8% last Friday. This is likely due to the negative sentiments surrounding the latest profit guidance which reported that Seatrium will likely continue to make a net loss for FY23, below consensus expectations. Although Seatrium has won numerous contracts, the contributions from the completed contracts will only show much later and would also depend on Seatrium’s successful delivery/execution of contracts. As such, we continue to maintain an “Accumulate” rating on Seatrium over the longer-term period

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