*Maybank Kim Eng Kopi-O (28 Oct 2021)*
Nikkei 29098.2 -0.03%
Kospi 3025.5 -0.77%
SSE 3562.3 -0.98%
HSI 25628.7 -1.57%
TWSE 17074.6 0.24%
SET 1627.6 -0.51%
JCI 6602.2 -0.82%
STI 3218.2 0.42%
KLCI 1583.1 -0.07%
*MKE Key Calls*
*Frasers Centrepoint Trust - Retail Recovery Play*
FCT’s revenue and NPI jumped c.160% YoY and c.213% YoY in 2H21, but was both lower at c.4% HoH, while its FY21 DPU at SGD12.09cts was strong at +33.7% YoY; it missed our estimates but was ahead of the street. We continue to see suburban malls leading Singapore’s retail sector recovery in its long reopening phase, with FCT’s resilient occupancies and improving rental reversions from its more sizeable AUM supporting DPU recovery in FY22. We have fine-tuned DPUs and kept our DDM-based TP at SGD2.90 (COE: 6.2%, LTG: 2.0%). Valuations at 5.5% DPU are undemanding versus peers and history, and FCT remains within our top S-REIT picks. BUY.
*MY*
o Expect KLCI to trade in a cautious mode amid concerns over China’s property sector as well as the lower Wall Street performances overnight. Sentiment will also stay cautious ahead of the upcoming Budget 2022 (which will be tabled on 29 Oct) as well as the US GDP data. Technically, we expect the benchmark index to range between 1,570 and 1,590, with supports at 1,577 and 1,555.
o *Sime Darby Bhd (SIME MK)*: We remain positive on Sime’s concerted effort to divest its non-core assets, unlock values, monetise and recycle its capital more effectively. Its latest exercise to sell 8.6% of its MVV land for MYR280m will see Sime report a net gain of MYR250m (3.7sen/shr) in FY23. Post deal, it will still own a sizeable landbank there (8,036 acres), which carries significant value. Maintain BUY and MYR2.70 TP.
o *TSH Resources (TSH MK)*: We expect TSH to deliver a 91% YoY core EPS growth for FY21E. TSH is positive on 2022’s CPO price outlook (though short of a forecast) due to underinvestment by the industry in recent years and under-fertilising by smallholders due to low CPO prices in 2018-2019. We assess TSH’s overall ESG risk to be medium given inherent business risks from operating over a wide geographical area across Malaysia and Indonesia. TSH remains a BUY with an unchanged TP of MYR1.46.
o *Salcon (SALC MK)*: Secured MYR20.9m sewerage system contract from Gamuda Land (Botanic) S/B in relation to the rehabilitation of vacuum sewerage system at Bandar Botanik and Ambang Botanik in Klang. This is Salcon’s first contract win of the year. Stock trades at a P/B of 0.5x. Salcon is sitting on a net cash of MYR78.6m, approximately 36% of its market capitalisation.
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