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CGS INTERNATIONAL |
UOB KAYHIAN |
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Plantations Still hot, with room to run ■ We raise our CPO price assumption for 2027F to RM4,800/t (from RM4,500) on El Niño-driven supply risks and stronger global biofuel demand. ■ While El Niño-driven supply risks should support CPO prices, monsoon rainfall could result in temporary retracement in CPO price by end-2026F. ■ Reiterate Overweight; our top sector picks are SDG, BAL and DSNG.
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Singapore Telecommunications (ST SP) Driving Long-Term ROIC Goals
Highlights • Singtel aims to lift ROIC by leveraging on Optus ARPU uplift and EBIT margin expansion while deploying resources to high growth businesses, namely NCS, RE: AI and Nxera. • Management is at the preliminary stage of unlocking value in fast-growing Nxera, suggesting either a tax-efficient REIT structure or listing of Nxera. An IPO could fetch an equity value of S$4b-4.5b for Nxera. • Singtel has unlocked S$6.8b through asset recycling, bringing the group closer to its S$9b mid-term target. Maintain BUY with a fair value of S$5.50.
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| LIM & TAN | LIM & TAN |
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The Edge Singapore: Coal consumption is set to hit a record this year as demand is bolstered by higher natural gas prices and a strong El Nino that’s increasing air-conditioning requirements, according to the International Energy Agency (IEA). We see Geo Energy Resources as a beneficiary of higher coal prices and coal volume growth in 2H’26 with increased contribution from its TRA coal mine and an operationally live MBJ toll road infrastructure since July’26. The ICI4 coal index has risen sizable in recent months, from average ICI4 prices of US$58.13/tonne for 1H2026 to ~ US$75/tonne in recent days. The benchmark valuation for the MBJ infrastructure alone stands at approximately US$1.5bn, above its current market capitalization. Geo Energy’s market cap stands at $977mln and currently trades at 12x forward PE and 1.4x PB, with a dividend yield of 0.8%. Consensus target price stands at 82cts, representing 49% upside from current share price. We maintain an “Accumulate” rating on Geo Energy Resources.
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SGX Group ($24.68, down 0.03) reported a resilient performance for August with higher year-on-year (y-o-y) trading activity in securities and FX derivatives. Securities daily average value (SDAV) rose 35% y-o-y in August to about S$2.2 billion, as total securities market turnover climbed 29% y-o-y to S$43.3 billion. While yoy performance continues to remain steady, we see mom and qoq performances for SGX equities and derivatives businesses moderating as we head into the year-end. Several uncertainties such as the outcome of the upcoming mid-term election in the USA, uncertainties relating to interest rate moves in the USA given that while inflationary pressures continues to remain higher than what the Fed officials are comfortable with, labour data and GDP seems to be moderating faster than expected, surging bond yield and oil prices (due to continued Middle Eastern unrest) and continued concerns over the artificial intelligence bubble concerns continues to see gyrations of USA technology stocks. Finally, SGX’s valuations at 31x forward PE, 1.8% normalized yield, 11x book and 1 year consensus target price of $25 all implying limited upside from current levels. We maintain our HOLD recommendation on SGX. |
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