*Maybank IBG Kopi-O (15 Feb 2022)*
Nikkei 27079.6 -2.23%
Kospi 2704.5 -1.57%
SSE 3428.9 -0.98%
HSI 24556.6 -1.41%
TWSE 17997.7 -1.71%
SET 1684.7 -0.85%
JCI 6734.5 -1.19%
STI 3421.2 -0.23%
KLCI 1583.8 0.31%
*Maybank IBG Key Calls*
*DBS Group - Rates rider*
DBS missed earnings. However, we think this is largely a timing mismatch. The Group’s large, low cost funding base and strong franchise designed to capture regional flows make it a prime beneficiary of rising rates as well as reopening. We estimate ROEs are set to rise nearly 4ppts above the levels of the past 10-years. This justifies a higher valuation, especially as risks to dividend payouts are higher. We increase TP to SGD41.82, where DBS would trade at 1.7x PB. Maintain BUY.
*MY*
o The KLCI will likely continue its pattern of range-bound trading after Wall Street slipped overnight. Rising geopolitical tensions over Ukraine as well as worries about Federal Reserve monetary policy tightening will also weigh on sentiment. Technically, we expect the benchmark index to range between 1,560pts and 1,600pts today, with supports at 1,530 and 1,509.
o *Telcos*: The formalization of the 2.6Ghz spectrum extension has so far not been accompanied by an official decision on the 5G rollout review. Thus, policy uncertainty would likely continue to weigh on near-term sentiment in our view. Our sector picks remain *TM (T MK, BUY, CP: MYR5.29, TP: MYR7.40)* and *Axiata (AXIATA MK, BUY, CP: MYR3.96, TP: MYR4.50)*.
o *Uzma (UZMA MK)*: Its wholly-owned subsidiary Uzma Engineering S/B was awarded a contract by ExxonMobil Exploration and Production Malaysia Inc. The scope of work comprises of non-rig assisted electric wireline logging equipment and services at West Malaysia waters. No value was given as it is based on work orders issued at clients’ discretion. This is the second project win in 2022, and will help to replenish its order book which stood at MYR2.3b at end-Sep 2021. Stock trades at 6.6x consensus FY6/23 EPS. Its net gearing stood at 0.8x at end-Sep 2021.
o *Muhibbah Engineering (MUHI MK)*: Its wholly-owned subsidiary Citech Energy Recovery Solutions UK (Ltd) was awarded two purchase orders from Siemens Energy to provide waste heat recovery units. The approximate combined value of the above orders amounted to MYR50.3m. This is the first job award in 2022, and will help to replenish its outstanding order book which stood at MYR886m as at 22 Nov 2021. The group reported a PATMI of MYR7.8m in 9M21 but that was mainly due to one-off net gain of MYR29.1m. Stock trades at 9.8x consensus FY22 EPS.
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