*Maybank Kim Eng Kopi-O (20 Oct 2021)*
Nikkei 29215.5 0.65%
Kospi 3029.0 0.74%
SSE 3593.2 0.70%
HSI 25787.2 1.49%
TWSE 16900.7 1.17%
SET 1630.4 -0.82%
JCI 6656.0 -0.04%
STI 3199.0 0.79%
KLCI 1606.0 -
*MKE Key Calls*
*Singapore Banks - Balance sheet balancing*
Singapore banks are sitting on massive liquidity. DBS has been mostly parking excess at central banks, while UOB has increased its securities holdings. For the latter, this may provide a near-term margin boost. Ultimately, higher lending is the most desired option, but varying speeds of re-opening cloud near-term visibility. Yet, we expect ASEAN-5 growth to surge in 2022E, which should give significant opportunities to participate UOB could benefit the most, in our view.
*MY*
o The KLCI is set to extend its upward trajectory, mirroring gains in overnight Wall Street. O&G and plantation stocks may continue to take center stage thanks to the relatedly firm commodity prices. Meanwhile, all eyes will also be on Malaysia CPI which is set to release later this week. Technically, we expect the benchmark index to range between 1,580 and 1,620, with supports at 1,577 and 1,555.
o *Gamuda (GAM MK)*: Gamuda’s acquisition of a piece of freehold residential land located approx. 38km north of HCMC CBD is not a surprise; the group had alluded to replenishing its landbank in VN especially with its Celadon City project set to be fully sold in a year-or-two. At MYR228.5m, the acquisition is not a drain to its balance sheet. We make no change to our earnings estimates and RNAV-TP pending completion of the land acquisition and the development details.
o *Haily (HAILY MK)*: Awarded a contract to construct and complete a terraced residential project in Plentong, Johor Bahru. This is the second project win since Haily was listed on the ACE Market in Jul 2021, and will help to replenish its outstanding order book which stood at MYR249.6m as at 10 Jun 2021. Stock is trading at 14.4x annualized 1H21 EPS.
o *Southern Cable (SCGBHD MK)*: Awarded a contract by Tenaga Nasional Berhad (TNB MK, Buy, TP: MYR12.00) to supply and deliver various size (interim) of underground cable and conductor. The contract, which is worth MYR18.5m, commenced on 14 Oct 2021 and is for a period of six months. This is the group’s second contract win of the year, lifting YTD win to MYR48.9m. Stock is trading at 30x annualized 1H21 EPS.
o *ACO Group (ACO MK)*: Its wholly-owned subsidiary ACO Holdings S/B is acquiring a 10% stake of the enlarged issued share capital of EV Connection S/B for MYR1m cash. EV Connection is a one-stop electric mobility service provider specialising in electric vehicle charging solutions and charging stations. The proposed acquisition comes with a cumulative profit guarantee of MYR1m for FY21-23. ACO trades at 10.9x annualized 1QFY2/22 EPS.
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