buysellhold july.23



Oversea-Chinese Banking Corporation Limited / OCBC ($13.91, up 0.17) reported net profi t of S$1.98 billion for the fi rst quarter of 2024 (“1Q24”), 22% higher than S$1.62 billion in the previous quarter (“4Q23”), and 5% above S$1.88 billion a year ago (“1Q23”). The performance came in above market expectaƟ ons. The Group’s resilient quarter-on-quarter performance was driven by total income rising to a new quarterly high, strict cost discipline and lower allowances. Income growth outpaced the increase in operating expenses, which drove an improvement in cost-to-income ratio (“CIR”) to 37.1%, while credit costs decreased to 16 basis points. Loans grew 1% and asset quality was sound with non-performing loan (“NPL”) ratio steady at 1.0%. The Group’s capital, funding and liquidity positions remained robust, providing flexibility to support business growth and handle uncertainties. Return on equity climbed to 14.7% and earnings per share was higher at S$1.76, on an annualised basis. Group net profi t rose 22% to S$1.98 billion, underpinned by record total income, well-controlled costs and lower allowances.

At $13.91, OCBC is capitalized at $$63bln and trades at 8-9x PE, 6% yield and 1.2x price to book. Bloomberg consensus 1 year target price of $14.77 implies potential upside of 6%. We maintain HOLD given the limited upside potential but still attractive dividend yields.


Singapore Post ($0.46, up 1 cent) announced its unaudited results for the second half and full year ended 31 March 2024.

The Group’s transformation into a logistics enterprise has yielded benefits, achieving a net profi t of S$81.5 million for the full year, an increase from S$38.8 million last year. Group revenue declined from S$1.87 billion to S$1.69 billion, largely due to the reduction in sea freight revenues. Operating fundamentals of core businesses have improved, off set by the decline in operating profi t from Famous Holdings. 


Singapore Post’s market cap stands at S$1.0bln and currently trades at 27.0x forward PE and 0.9x PB, with a dividend yield of 1.6%. Consensus target price stands at S$0.56, representing 21.7% upside from current share price. We maintain an Accumulate rating on Singpost.



AEM Holdings (AEM SP)
2H24 hopes diminish


Still too early – Downgrade to HOLD

AEM 1Q24 revenue dropped 38.3% YoY to SGD94.2m while NPAT fell 85% YoY to SGD2.3m, below consensus estimates but in line with ours’. We were too optimistic of a much stronger 2H24E based on potential order recovery from its key customer as well as ramp up of recently unveiled new orders. However, management updated that the new orders will only start mass production at end-FY24 and the main surge will only come in FY25E. It also only expects an uptick in growth in 2025. Despite thinking the worst is over for AEM, we now believe earnings recovery is only likely in FY25E and it would be better to revisit it towards 4Q24. We lower our FY24E-25E PATMI estimates by 31.8% and 21.6%, respectively, to reflect the new reality and downgrade to HOLD with a new TP of SGD2.04, pegged to 11x FY24/25E blended PE.

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Civmec Ltd (CVL SP)

Delivery on track


3Q24 a slight market beat; becoming a yield play

3QFY24 NPAT of AUD17.1m (+16.9% YoY) came in marginally ahead of our and market expectations, bringing 9M24 earnings to AUD49m (+14.2% YoY). Given the group’s strong EBITDA and net cash balance sheet, we expect Civmec to raise its FY24 dividend payout by 20% to AUD0.06 (1H24: AUD0.025 from AUD0.02 a year ago). This also translates into an attractive annualised yield of 6.9%. We roll forward our valuation base to FY25E, still pegged at 10x P/E. Maintain BUY and TP of SGD1.05.



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Globetronics Technology (GTB MK)

1Q24: Weak start Subdued performance & outlook; SELL maintained


GTB’s 1Q24 earnings remained poor amidst a challenging operating environment and subdued global demand in the premium wearables space. Pending briefing updates later this morning, we maintain our FY24-26E forecasts and TP of MYR1.05 (pegged to 21x FY25E PER, at -1.5SD to mean). Despite a 31% retracement in GTB’s share price since 15 Jan 2024, we maintain our SELL rating on the basis of its weak long-term outlook.



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