SGX
Phillip Capital Market Reports:
Morning note:
US Market
OCBC
DBS
Latest changes: DBS Equity Picks
DBS Equity Picks have consistently outperformed market benchmarks since inception.
NEW ADDITION
Add CDL Hospitality Trust to Dividend category (Singapore)
NEW REMOVAL
Remove Far East Hospitality Trust from Dividend category (Singapore)
China Auto Sector
Aug passenger vehicle sales supported by market promotion
Aug-23 passenger vehicle (PV) retail sales grew by 2.5% yoy to c.1.9m units; within expectation
New energy vehicle (NEV) retail sales climbed 34.5% yoy, maintaining a healthy growth trajectory; penetration hit 37.3% last month
Anticipate sales growth momentum to remain decent ahead of national holidays and as the industry enters into the peak season in 4Q
What are our top picks in the auto sector?
Click here to read our views
China Property Sector
Guangzhou, Foshan and Dongguan site visits: Exacerbated sales polarisation
Recent easing of down-payment and mortgage rules nationwide has exacerbated the gap in home sales between higher and lower tier cities
Guangzhou recorded decent rebound in property sales office visits, whereas the impact was much less in Foshan and Dongguan
Expect physical market to hit a bottom in 3Q23 with more signs of stabilization emerging in 4Q23
What is our preferred pick?
Click here to read our views
LendLease Global Commercial REIT (LREIT SP)
Stronger than sell-down suggests
Recent sell-down unwarranted for this Singapore-centric retail player with dominant presence across Singapore
Balance sheet metrics have weakened but remain comfortably above loan covenants
Sale of office assets likely better than equity raise if management decides to deleverage, which could bring gearing down to 32%
Do we think that the recent sell-off is unwarranted and significant value is emerging?
Click here to read our views
Sun Hung Kai Properties (16 HK)
Growing via rental portfolio expansion
FY23 underlying earnings fell 17% to HK$23.9bn, c.10% below our estimate due to weaker-than-expected development profit
Aims to pay out 40-50% of underlying earnings as dividend in the future (FY23: 60%)
Expanding rental footprint to augment long term earnings growth
Do we see its trough valuation to cushion downside risk?
Click here to read our views
DBS Group Research | Equity Picks
Singapore Equity Picks: Read more
Hong Kong Equity Picks: Read more
UOB
UOBKH: Regional Morning Meeting Notes: Monday, September 11, 2023
Click on the link for details.
UOBKH: Retail Market Monitor: Monday, September 11, 2023
Click on the link for details.
UOBKH: Country Dailies: Monday, September 11, 2023
Click on the link for Greater China Daily.
Click on the link for Indonesia Daily.
Click on the link for Malaysia Daily.
Click on the link for Singapore Daily.
Click on the link for Thailand Daily.
KGI
Top Stories, 11 Sep 2023
1. Stock futures are little changed ahead of key inflation data: Live updates
2. HKEX’s Hang Seng TECH Index Futures and Options are the first exchange-traded derivatives contracts to track the Index, providing investors with a new tool to manage risks in their exposures to Hong Kong-listed technology companies
Find out more: https://www.kgieworld.sg/futures/hkex-hang-seng-tech-index
3. Oil Price Resurgence Has Further to Run After the Saudis Turn the Screw
4. CLSA says sell-off in Chinese stocks ‘has passed strongest point’ and Beijing needs to address market risk, investor concerns
5. Biden talked with China's Li Qiang about 'stability' at G20
6. EUR/USD remains on the defensive above the 1.0700 mark, US CPI, ECB rate decisions eyed
Technical Analysis: 11 September 2023
🇸🇬 SG
Olam Group (OLG SP)
Del Monte Pacific Ltd. (DELM SP)
🇭🇰 HK
Sunshine Insurance Group Co Ltd (6963 HK)
PICC Property and Casualty Co Ltd (2328 HK)
Read More: https://www.kgieworld.sg/research/sep11ta23
TRADING IDEAS: 🇸🇬 SINGAPORE
11 September 2023
🏙 Yangzijiang Shipbuilding (YZJSGD SP): Double bonanzas-record order book and weak RMB
BUY Entry 1.67 – Target 1.80– Stop Loss – 1.61
🏢 ThaiBev (THBEV SP): Expecting a tourism boost in Thailand during China’s upcoming golden week
RE-ITERATE BUY Entry 0.58 – Target – 0.62 Stop Loss – 0.56
➡️ Read More: https://www.kgieworld.sg/research/sep11sg23
CIMB
Trendspotter of the day (SIN/HKG/MAL): 11th September 2023
Potential corrective wave up
HKG
Return of the uptrend
MAL
To fill the gap next?
Bullish breakout
APAC+US
APAC: Weekly Sector Highlights - Finance - 11 September 2023
Weekly Sector Highlights
Finance
▌ FINANCE COMPANIES / BANKS
CHN: ICBC-A (REDUCE, tp:CNY3.80) - Pressure from declining demand deposit mix (4/9)
2Q23 net profit growth was 2.5% yoy. We expect 3Q23F net profit yoy growth to remain slow given 1H23’s weaker nominal GDP growth. Asset quality has improved, with better NPL ratio, special mention loan ratio, and over-90-days-overdue loan mix. We are concerned about the deposit mix pressure, with ICBC’s 1H23 demand deposit mix falling to 42%, the lowest among the big four banks. Reiterate Reduce rating, with an unchanged TP of Rmb3.80.
CHN: China Minsheng Bank-A (REDUCE, tp:CNY2.40) - Remain concerned about ROE (5/9)
MSB’s net profit declined 20.5% yoy in 2Q23, dragging ROE down to 4.7%. Core tier 1 ratio rose by 10bp yoy in 2Q23, at the cost of the slowest loan growth yoy among banks under our coverage. Lower personal loan yield dragged average yield on interest-earning assets in 1H23. We reiterate our Reduce rating, with an unchanged TP of Rmb2.40.
HKG: ICBC (ADD, tp:HKD3.90) - Pressure from declining demand deposit mix (4/9)
2Q23 net profit growth was 2.5% yoy. We expect 3Q23F net profit yoy growth to remain slow, given 1H23’s weaker nominal GDP growth. Asset quality has improved, with better NPL ratio, special mention loan ratio, and over 90 days overdue loan mix. We are concerned about the deposit mix pressure, with ICBC’s 1H23 demand deposit mix falling to 42%, the lowest among the big four banks. Reiterate Add rating, with an unchanged TP of HK$3.90.
HKG: China Minsheng Bank (REDUCE, tp:HKD2.20) - Remain concerned about ROE (5/9)
MSB’s net profit declined 20.5% yoy in 2Q23, dragging ROE down to 4.7%. Core tier 1 ratio rose by 10bp yoy in 2Q23, at the cost of the slowest loan growth yoy among banks under our coverage. Lower personal loan yield dragged average yield on interest-earning assets in 1H23. We reiterate our Reduce rating, with an unchanged TP of HK$2.20.
IND: Banks (OVERWEIGHT) - Clarity on government’s interest rate subsidy (4/9)
On 4 Sep 2023, the government provided clarity on its micro and retail credit (KUR) programme after it introduced a step-up rate for borrowers in Jan 23. Banks’ total interest rates for KUR loans remain unchanged, but we think new regulations would expedite KUR borrowers’ graduation to non-subsidy loans. Subsidy is in line with our expectations, though it may lift large banks’ latest NIM figures as they have yet to accrue 2023F’s KUR subsidy rate.
IND: Bank Tabungan Pensiunan Nasional Syariah (ADD, tp:IDR3,170.00) - Looking for COC inflection (4/9)
BTPS’s attendance and repayment rates improved in Jul 23 vs. 2Q23’s average. However, it has yet to translate into better COC in 7M23. We maintain our FY23F EPS forecasts following the release of 7M23 figures; we need to see sustainable improvement in attendance and repayment rates. We reiterate Add with a GGM-based TP of Rp3,170 (2.2x P/BV 2024F).
MAL: Banks (OVERWEIGHT) - Minimal NP impact from weaker loan growth (4/9)
We reiterate our Overweight rating due to compelling valuations and potential write-backs in management overlay. Our top pick is RHB Bank. Loan growth eased further from 4.4% yoy at end-Jun 23 to 4.2% yoy at end-Jul 23 due to lacklustre business loan momentum (+0.2% yoy in Jul 23). GIL ratio stayed at 1.76% at end-Jun 23 and end-Jul 23, signalling that the ratio likely peaked at 1.8% at end-May 23 following an increase in 5M23.
THB: SCB X (ADD, tp:THB145.00) - NIM expansion to offset high credit cost (7/9)
We project SCB’s credit cost at a conservative 153-167bp for FY23-24F. This is still lower than our forecast of 180-200bp for KBANK. Strong NIM expansion could offset high credit costs, in our view. We reiterate our Add call on SCB, with an unchanged TP of THB145. SCB is our second top pick among Thai banks (following BBL).
US: Banks - Banking | Weekly Balance Sheet Trends: Large Bank Deposits Expand While Small Bank Deposits Were Flat (5/9)
US: Trustmark Corporation (MARKET PERFORM 3) - TRMK | Friday Night Lights; Announces Settlement With Prior Lawsuit (5/9)
US: Alerus Financial Corporation (MARKET PERFORM 3) - ALRS | Updating Estimates Following Management Meetings (8/9)
US: Finance Companies - Banking | Bank Weekly: Top Expense Managers Over the Last 12 Months (5/9)
US: Finance Companies - Banking | Takeaways From the 13th Annual Raymond James Bank Conference and Proprietary Survey Results (8/9)
APAC: ASIA Pacific Daily - 11 September 2023
Equity Research Reports....
▍IDEA OF THE DAY (IOD)...
THB: Hospitals (OVERWEIGHT) - A race for medical tourism in Thailand (8/9)
BH is a larger beneficiary of fly-in patients, while BDMS benefits more from expats and foreign tourists who fall ill while visiting Thailand. Given the strong fly-in patient trend, especially from the Middle East, we see BH registering high EBITDA margins and solid earnings growth in 3Q23F. We have Add ratings for both BH and BDMS, but our preference is for BH on the back of its stronger revenue and earnings momentum.
▌ TARGET PRICE CHANGES...
HKG: NIO Inc (ADD, tp:HKD93.00▼) - EV deliveries set to accelerate in 3Q/4Q23F (8/9)
KR: SNT Motiv (ADD, tp:KRW60,000.00▲) - Time to factor in upcoming positives (8/9)
MAL: Beshom Holdings Bhd (HOLD, tp:MYR0.99▼) - Weakness in MLM set to continue (8/9)
▌ SECTOR & COMPANY NOTES...
CHN: Gree (ADD, tp:CNY47.00) - Sales growth expected to accelerate in 2H23F (8/9)
HKG: Tencent (ADD, tp:HKD463.00) - Tencent launches its AI model – Hunyuan (8/9)
IND: Telco - Integrated (OVERWEIGHT) - Let the good times roll (8/9)
SIN: Grab Holdings (ADD, tp:USD4.50) - Sustainable growth is key (8/9)
▌ RECENT 'IDEAs OF THE DAY'...
THB: Hospitals (OVERWEIGHT) - A race for medical tourism in Thailand (8/9)
THB: Travel & Leisure - Overall (OVERWEIGHT) - Visa requirement may be lifted for Chinese (5/9)
KR: Samsung Electronics (ADD, tp:KRW115,000.00▲) (HC) - Entering Nvidia’s AI GPU supply chain (1/9)
KR: Amorepacific Corp (ADD▲, tp:KRW160,000.00▲) - Strong travel retail recovery expected (22/8)
MAL: Semiconductor (UNDERWEIGHT) - Risk-reward not appealing (16/8)
(HC) - High Conviction; (ESG) - ESG picks
Lim&Tan
MayBank
Sea Ltd (SE US)
Genting Malaysia (GENM MK)
Mitra Adiperkasa (MAPI IJ)
Thai Oil (TOP TB)
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