While Middle East tensions have escalated in the past 72 hours, we believe that the situation remains fluid. Oil prices remain the key worry and could negatively impact Asian growth and thus Singapore’s open economy should it escalate past US$100/bbl. In our view, aviation stocks should be able to pass on any oil price related increases, while near-term sentiment for the upstream and offshore marine sector should remain positive. An overall risk-off sentiment will likely pervade the markets in t...
KEY HIGHLIGHTS Strategy The Impact Of Escalating Middle East Tensions A fluid situation with oil prices the key worry. Small/Mid Cap Highlights BRC Asia (BRC SP/BUY/S$1.94/Target: S$2.42) 1QFY24: Strong results as construction demand recovers. TRADERS’ CORNER Aztech Global (AZTECH SP): Trading BUY Isdn Holdings (ISDN SP): Trading BUY
GREATER CHINA Economics Money Supply: Slower-than-expected credit expansion. Trade: Exports drop 7.5% and imports fall 1.9%. Sector Healthcare: ICL: Recent policies may cloud revenue growth in 2024; accelerating market consolidation to benefit leading players. Results Zhejiang Shuanghuan Driveline Co (002472 CH/BUY/Rmb21.60/Target: Rmb27.60): 4Q23: Results in line; but slowdown in EV gear business is apparent. MALAYSIA Sector Banking: The operational commencement of the various new digital bank...
ASEAN Sector Banks: ASEAN Banks: Quarterly update. GREATER CHINA Economics Inflation: CPI inflation moderates as CNY effects fade. Sector Automobile: Weekly: Raise 2024 auto sales growth to 7.5% on bigger price cuts. Maintain UNDERWEIGHT. Top SELLs: BYD, Li Auto and XPeng. Top BUYs: CATL and Desay SV. Consumer: Focus on four key theses for the sector. Property: 2023 results wrap-up: Profitability deteriorates as expected; outperformance of CR Land/COLI the main highlight. MALAYSIA Update Dialo...
MMT’s subsea and offshore services market has traditionally been in Asia; however, it has successfully expanded into the Middle East, West Africa and the North Sea in the past few years. Profitability has grown materially over the past three years with management guiding for EBITDA margin expansion in 2024 and 2025. In 2H23 alone, the company doubled its orderbook to finish 2023 at US$734m.
KEY HIGHLIGHTS Sector Banks ASEAN Banks: Quarterly update. Small/Mid Cap Highlight Mermaid Maritime (MMT SP/NOT RATED/S$0.137) Positioned for growth with orderbook expansion and higher margins. TRADERS’ CORNER AEM Holdings (AEM SP): Trading BUY Thai Beverage (THBEV SP): Trading BUY
Recent comments by US Fed officials raise the spectre of zero interest rate cuts should the US economy remain robust. We view Singapore corporates’ debt levels as manageable across the companies we cover, with free cash flow generation forecast to remain strong in 2024. Nevertheless, some companies’ profit margins could erode in 2024 should interest rate cuts be deferred into 2025, eg WIL, CDL, CLI, SCI and KEP. Companies with high cash piles (eg VALUE, GENS and YZJ) could benefit.
GREATER CHINA Sector Internet: Rewarding shareholders in 2023; emerging strategic growth prospects in 2024. MALAYSIA Update Maxis (MAXIS MK/BUY/RM3.55/Target: RM4.20): Compelling risk-reward as Maxis focuses on driving its core business and delivering three-year earnings CAGR of 8%. Upgrade to BUY with a higher target price of RM4.20. SINGAPORE Strategy Higher-for-a-lot-longer Interest Rates: Some companies to suffer, some to benefit.
GREATER CHINA Strategy Alpha Picks: April Conviction Calls: Adding AIA, Midea, Hansoh Pharmaceutical, Shenzhen Inovance and Trip.com to our BUY list, with SELL calls on BYD, EVE Energy, and Li Auto. INDONESIA Strategy Alpha Picks: Outperformance In Mar 24 and 1Q24: Our picks are ACES, BBTN, CMRY, SIDO, EXCL, MAPI, JSMR, CTRA, and AKRA. MALAYSIA Strategy Alpha Picks: Expanding The Variety Of Events Bets: Our Alpha Picks trounced the KLCI in Mar 24. Apr 24 picks: GENM, Inari, Mah Sing, MrDIY, MY...
KEY HIGHLIGHTS Strategy Alpha Picks: Robust end to 1Q24. Add CSE and LREIT; Remove MINT, CVL and FEH: Our Alpha Picks portfolio rose 6.0% mom in Mar 24 and 13.7% qoq for 1Q24, outperforming the STI by 3.4ppt and 14.2ppt respectively. TRADERS’ CORNER Olam Group (OLG SP): Trading BUY Singapore Tech Engineering (STE SP): Trading BUY
Our Alpha Picks portfolio rose 6.0% mom on an equal-weighted basis, outperforming the STI by a material 3.4ppt. The outperformance was driven by broad-based strength across most of our portfolio with the best showing coming from Riverstone, Yangzijiang Shipbuilding and Singtel. In 1Q24, our Alpha Picks portfolio surged by 13.7% qoq, surpassing the STI by a hefty 14.2ppt qoq. For Apr 24, we add CSE and LREIT while removing MINT, CVL and FEH.
GREATER CHINA Strategy Small-Mid Cap Biweekly Eyeing re-rating for refrigerant suppliers as AC dealers front-load for peak sales in 2Q24. Results China Construction Bank (939 HK/BUY/HK$4.85/Target: HK$6.00) 2023: Results in line; expect revenue headwinds to persist in 2024. COSCO SHIPPING Holdings (1919 HK/BUY/HK$8.44/Target: HK$10.60) 2023: Results in line; expect an upbeat 1H24 performance. Maintain BUY. Kweichow Moutai (600519 CH/BUY/Rmb1,713.99/Target: Rmb2,488.00) 2023: Earnings up ...
GREATER CHINA Strategy Alpha Picks: March Conviction Call: Adding CMB, COLI, CR Beer, Kuaishou and TUL to our BUY list, closing out SELL calls. INDONESIA Strategy Alpha Picks: Significant Outperformance In Feb 24: Our picks are BBTN, CMRY, SIDO, EXCL, MAPI, JSMR, CTRA, MYOR and AKRA. MALAYSIA Strategy Alpha Picks: Focusing On Earnings Momentum: Our Alpha Picks underperformed the KLCI in Feb 24 (-0.9% vs 2.5%). Mar 24 picks significantly feature companies with good earnings momentum. SINGAPORE...
GREATER CHINA Economics PMI A mixed bag, weakness persists. Strategy Alpha Picks: March Conviction Call Adding CMB, COLI, CR Beer, Kuaishou and TUL to our BUY list, closing out SELL calls. INDONESIA Strategy Alpha Picks: Significant Outperformance In Feb 24 Our picks are BBTN, CMRY, SIDO, EXCL, MAPI, JSMR, CTRA, MYOR and AKRA. Results Nippon Indosari Corpindo (ROTI IJ/HOLD/Rp1,225/Target: Rp1,200) 4Q23: High return rate caused 38.9% yoy decline in NPAT. Downgrade to HOLD. PP London Sumatra...
KEY HIGHLIGHTS Strategy Alpha Picks: Outperformance Led By Small/Mid-Caps; Add RSTON; Remove SATS And Valuetronics: Our Alpha Picks portfolio rose 1.6% mom in Feb 24, outperforming the FSSTI’s loss of 0.4% as more than half of our portfolio delivered gains of 0.7-23.1% mom. Sector REITs: S-REITs monthly update (Feb 24). Results ComfortDelGro Corporation (CD SP/BUY/S$1.36/Target: S$1.58): 2023: In line with expectations; bright spots in 2024. Delfi (DELFI SP/HOLD/S$0.965/Target: S$1.070): 202...
Although the FSSTI recorded a decline of 0.4% mom in Feb 24, more than half of our picks, especially the small/mid-caps (Frencken, Marco Polo Marine and Food Empire), recorded decent gains. Our Alpha Picks portfolio rose 1.6% mom on an equal-weighted basis, outperforming the FSSTI by 2.0ppt. For Mar 24, we add Riverstone, and take profit on SATS and Valuetronics.
GREATER CHINA Sector Consumer: Tourism, catering and movie consumption: Strong performances during CNY. Update Yadea Group Holdings (1585 HK/BUY/HK$12.18/Target: HK$16.00): Premiumisation and external battery sales as new growth drivers. Maintain BUY. Cut target price from HK$20.00 to HK$16.00. INDONESIA Results Vale Indonesia (INCO IJ/BUY/Rp3,690/Target: Rp4,400): 4Q23: NPAT exceeds expectation, rising 66.3% yoy on higher nickel deliveries. Upgrade to BUY. MALAYSIA Results KPJ Healthcare (K...
KEY HIGHLIGHTS Strategy 2024 Budget – An Attractive Budget For The People: A budget that attempted to help with the rising costs of living and offer support for mid-career and lower-income workers to upskill. Energy transition and AI strategies were the highlights, in our view. Update Frencken Group (FRKN SP/BUY/S$1.42/Target: S$1.65): Positive recovery signs from key customers; raise target price by 34% to S$1.65. TRADERS’ CORNER Isdn Holdings (ISDN SP): Trading Buy Yangzijiang Financial Ho...
The Budget 2024 unveiled by Deputy Prime Minister and Minister of Finance Lawrence Wong continued its strategy of helping Singaporeans contend with the rising costs of living, lending support for mid-career and lower income workers to upskill, investing in the country’s energy transition, and making slight changes to taxes for property developers. Importantly, Singapore has set aside S$1b to invest in new AI initiatives.
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