buysellhold july.23



Keppel DC REIT

An opportunistic investment swap


■ Win-win: divesting Intellicentre Campus crystallises revaluation gains while investing in the AU DC note allows KDC to maintain a similar income stream.

■ Transactions are pro-forma FY23 DPU-accretive at 0.7% while gearing will improve from 37.4% to 36.6%; debt headroom is c.S$170m (40% gearing).

■ Reiterate Hold given lack of catalysts and uncertainty of Bluesea resolution.


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1Q24F nickel mining preview


■ In our view, NPI price should sustain at current level (US$11.5k/t) at least until 2Q24F. China RKEF cash margin currently still in negative territory.

■ We estimate NPI cash margin to be flattish qoq at US$1.2k/t in 1Q24F. In 1Q, both ASP (NPI price: -7% qoq) and cash cost (ore cost: -14% qoq) declined.

■ Maintain Neutral on Indonesia’s nickel mining sector, with HRUM as our sector top pick. 



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1Q24 earnings on track


Maintain HOLD 1Q24 core net profit and 1st interim gross DPU of 2.96 sen were within expectations. Our earnings forecasts and DDM-TP of MYR1.75 (Ke: 8.2%) are unchanged. CY24E net DPU yield of 5.7% is slightly below the sector’s average of 5.9%. Maintain HOLD. For retail REIT, we prefer Pavilion REIT (PREIT MK, CP: MYR1.27, BUY, TP: MYR1.47).



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Mynews Holdings (MNHB MK)

Updating ESG 2.0 score


Lifting ESG 2.0 score to 50 We ascribe a higher ESG 2.0 score of 50 (out of 100, from 28 previously) to MNHB following better carbon emission data transparency, and more detailed sustainability strategies outlined in its most recent 2023 annual report. A clear gap remains with the group’s lack of ESG targets which, if addressed, could place MNHB at the forefront of sustainability disclosures amongst its domestic convenience store peers. Maintain BUY with an unchanged TP of MYR0.62 (1.7x FY24E PBV, about -0.5SD to mean).



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Keppel DC REIT ($1.66, down 2 cents) announced that it, has entered into a sale and purchase agreement to divest its 100% freehold interest in Intellicentre Campus in Sydney, Australia at an agreed value of A$174.0 million (approximately S$152.1 million) to Macquarie Data Centres Macquarie Park Property SubTST Pty Ltd (as trustee of Macquarie Data Centres Macquarie Park Property SubTrust). 

The trustee and Macquarie Data Centres Macquarie Park Property SubTrust are indirect wholly-owned subsidiaries of Australian-listed Macquarie Technology Group Ltd (MTG), which is also the ultimate parent company of Macquarie Data Centres Pty Limited (MDC), the existing tenant of the property

Keppel DC REIT’s market cap stands at S$2.86bln and currently trades at 18x forward PE and 1.24x PB, with Bloomberg consensus expected dividend yield of 5.9%. Consensus target price stands at S$1.88, representing 13% upside from current share price. Despite the continued tailwinds from demand for data centres, valuations have come down due to a higher interest rate and customer defaults, we thus call an “Accumulate on Weakness” on KDC REIT over the medium to longer term as investors should benefit when the Fed rate cut cycle starts in 2H’24.


Gaming – Singapore

MBS 1Q24: Record High Earnings Lifted By Robust Tourism Statistics And Major Entertainment Events


MBS’ 1Q24 net gaming revenue rose 15% qoq, achieving a record high at about 156% of pre-pandemic levels. This mainly reflects a continuously strong VIP market segment (volume exceeded 2019’s level) and mass market segment (all-time high gaming revenue). 1Q24’s record-high results were also boosted by higher tourist arrivals and spending, driven by mega entertainment events such as Taylor Swift’s six concerts. Maintain OVERWEIGHT. BUY Genting Singapore.



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