buysellhold july.23




1Q24: Slightly Below Expectations; A Bittersweet Quarter


Delfi’s 1Q24 revenue of US$150.7m (-5.3% yoy) was slightly below our expectations, forming 26% of our full-year forecast. The revenue decline stemmed from weaker local currencies against the US dollar, as well as lower trade promotion spending for its own brands. Although cocoa prices are three times higher than a year ago, management expects to be able to mitigate the potential impact with strategic initiatives outlined in this report. Maintain HOLD with a target price of S$1.07.



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Lenovo Group (992 HK)

Lenovo Partners Up With Alat To Expand Business Opportunities in MEA


Lenovo announced a strategic partnership with Alat, which involves a CB issuance of US$2b, and the establishment of a regional supply chain in Saudi Arabia for the MEA market by Lenovo. The deal is very positive for Lenovo’s mid-long-term growth as it helps Lenovo strengthens its position in a fast-growing market, although the sizable dilution (around 19%) from this round of fund raising may impact investor sentiment in the near term. Maintain BUY and target price of HK$13.50. 



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SAM Eng & Equipment (SEQB MK)

4QFY24: Transcends expectations


Strong beat in 4QFY24; maintain BUY @ MYR6.85 TP SAMEE’s 4QFY24 results was a strong beat with reference to our initiation report on 3 May (link). Hence, we lift our FY25/26E earnings forecasts by 14%/5% respectively to account for: i) higher aerospace revenues; and ii) higher PBT margin assumption for both aerospace and equipment segments. We raise our TP to MYR6.85 (from MYR6.05) – based on 32.7x (from 31x) PER on CY25E EPS, which is at +1.5SD to its 5-year mean. SAMEE is a secular growth stock and is one of our tech sector’s top picks.

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1Q24 results within expectations


HOLD maintained RHB’s 1Q24 results were within expectations, but we have trimmed our FY24E net profit by 3% on higher credit cost assumptions. We maintain our FY25/26E forecasts. Correspondingly, we trim our TP to MYR5.90 from MYR6.20 on a lower FY24E ROE of 9.2% (from 9.4%). We maintain an FY24E PBV target of 0.8x. HOLD, dividend yields of 7% provide support.



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SATS ($2.63, down 1 cent) reported its unaudited results for the second half (2H) and the full year ended 31 March 2024 (FY24).

With aviation rebounding from the pandemic and the consolidation with WFS as part of a Group-wide transformation into a global player, SATS has swung back to profitability with PATMI of S$56.4 million for the full year on the back of record high revenue of S$5.1 billion for the period. Improved cargo performance and travel recovery buoyed Group revenue. SATS has been delivering steady improvements in financial performance over the quarters since its integration with WFS, the world’s largest air cargo handling firm, in April 2023. The integration with WFS is on track, with the Group’s expanded network, global connectivity and consolidation with WFS contributing to its return to profitability

Outlook: The transformation of SATS into a global player with an expanded route network and global presence makes the Group well positioned to capitalise on strong tailwinds and positive growth momentum in air cargo and passenger traffic, which will drive sustainable long-term value-added growth in the aviation sector. Global air passenger traffic is projected to recover fully to 2019 levels by the end of 2024, while global air cargo traffic is forecasted to grow by 4.5% in 2024. SATS will benefit from these trends and be further bolstered by a robust e-commerce sector and the growing demand for specialised services which give better yields from air cargo services. Looking ahead, SATS’ financial focus remains on reducing debt, and optimising our cash position to strengthen our balance sheet, reinvesting for sustainable growth, and returning value to shareholders.

SATS’s market cap stands at S$3.9bln and currently trades at 25x forward PE and 1.7xPB, with a dividend yield of 0.57%. Consensus target price stands at S$3.11, representing 18% upside form current share price. For investors looking to find post Covid-19 recovery plays would be better off looking at SIA or SIA Engineering given the latter 2 companies have more attractive yields and also lower valuations. We recommend “Accumulate” SIA & SIA Engineering and HOLD SATS





We continue to like Innotek for its ability to leverage on their new customers, especially in the “Artificial Intelligence” area where they are the single largest source supplying metal stamped and precision machined parts to this customer. Other promising growth areas include battery storage solutions, medical devices, electric vehicle components, gaming machines as well as semiconductor components. Innotek is capitalized at $126mln and trades at 10x forward PE with 56% of its market cap backed by its net cash position and yields 3.6%. We maintain an “Accumulate” rating on Innotek.

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