Oiltek International Ltd - Order book spikes 5x

• Oiltek announced a heads of agreement with Bioseaga Industries for the construction of a 300 MT/day sustainable aviation fuel (SAF) facility in Sabah worth US$350mn (RM1.4bn). A definitive agreement is expected to be signed within six months. Conditions to the agreement include project financing, regulatory approval, land confirmation and final terms and conditions.
• The RM1.4bn contract will boost the orderbook by five times to RM1.75bn. We expect the project to require 2.5 years to complete. This project will be the 3rd SAF plant in Malaysia after EcoCeres and Pengerang, both in Johor. With jet fuel prices doubling since the Iran war, we expect the SAF plant’s demand and profitability to improve dramatically. Demand for SAF is driven by the increasing commitment to renewables, the use of sustainable waste oil, and energy security to ensure the availability of jet fuel.
• We raise our FY26e and FY27e PATMI by 12% and 322%, respectively. We are assuming 5% of the project is recognised in FY26e and 45% in FY27e. Our target price is raised to S$2.72 (prev. S$1.18). We peg Oiltek to 24x PE FY27e, a 50% premium to listed peers in Malaysia trading at 16x PE, 2 years forward. The premium is justified by growth, high ROE, and an RM100mn net cash balance sheet. We also expect Oiltek to gradually build a recurrent earnings stream from maintenance and ownership stakes in SAF plants. SAF demand is only 0.6% of global jet fuel consumption. Based on airline commitments, demand is expected to grow at a 46% CAGR through 2030. There are opportunities for Oiltek to capture more contracts in the region.

Sheng Siong Group Ltd – More stores and margin expansion

 

 

• 9M24 revenue met our expectations, but PATMI exceeded at 75%/79% respectively of our FY24e forecast. Progressive wage reimbursement and gross margins were higher than expected. Gross margin was a record 31.3% in 3Q24 from higher fresh product contribution and margins.
  
  
  
• In 3Q24, Sheng Siong opened two new stores in Singapore, bringing the total to 73 (or +1.4% expansion in space). Another new store opened in October, and Toa Payoh store acquisition is pending completion by the end of this year. Furthermore, five new stores are waiting for their tender results from HDB.
  
  
  
• We raised our FY24e forecast by 5% to S$145.8mn. Our ACCUMULATE recommendation is maintained, and the target price has increased from S$1.66 to S$1.74, based on a historical PE of 18x. Sheng Siong will at least open five new stores in FY24. This will almost triple the average of two new stores per year over the past three years.  New stores will provide at least 6% points of revenue growth next year. The unknown has been sluggish in same-store sales of around 2%, which includes the recent GST hike.

Sheng Siong Group Ltd – New stores start to accelerate

• 1H24 revenue and PATMI were within expectations at 49%/50% of our FY24e forecast. Revenue only grew 1.2% YoY in 2Q24. We estimate same-store sales sales contracted in 2Q24 by around 2% points. Gross margins at a new record of 30.9%.
  
• In 1H24, there were two new HDB stores opened. Another three new stores will be opening in 2H24 with three more pending results of the tender. In addition, seven more tenders are expected to be opened in 2H24. Some of the tenders included several competitor supermarkets closing down stores.
  
• We maintain our FY24e forecast and target price of S$1.66.  Our valuations are based on historical PE of 18x. We forecasted a total of eight new stores in FY24e and FY25e. There is upside to our forecast as more tenders open up. Sheng Siong will face slower growth this year due to a lack of new stores of only three over the past twelve months. Gross margins continue rising to new record levels.

Suntec REIT – Resilient Singapore assets and improving overseas outlook

 

 

• Gross revenue for 1H24 is in line with expectations, inching up by 1.2% to S$226.9mn due to the strong performance of Singapore assets (Retail rental reversion: +20.8%, Office: +9.7%) while overseas assets faced pressure (Australia revenue: -6.4%, UK: -16.1%).
   
   
• NPI increased by 1.5% to S$151mn, forming 48% of our FY24e estimates. DPU plummeted by 12.5% in the absence of the 0.398 cents capital top-up, with 1H24 DPU standing at 3.042 cents, which is 49% of our full-year forecast.
   
   
• SUN continues to demonstrate the capability of monetizing its assets as it divested S$31.5mn of strata units at 27% above book value and has put another 12.3k sqft for sale at c.S$41.8mn. With the strengthened cash position and the possible uplift on MAS’s regulation (ICR lowered from 2.5x to 1.5x), SUN would soon improve its balance sheet, which has been one of the main drags on its share performance. We reiterate our BUY recommendation with an unchanged DDM-TP of S$1.41 and FY24e-25e DPU of 6.2 to 7.5 cents.

Oiltek International Ltd - Riding major capex cycles

 

• The order book for Oiltek has been growing at a 50% CAGR over the past four years.
  FY24e is poised to be a fifth straight year of record orders. Oiltek secured new orders
  last week, which boosted its order book by around 30%, currently RM400mn or two
  times FY23 revenue.

• FY23 net profit jumped 51% to RM19.1mn on the back of strong order wins of RM322mn
  (FY22: RM196mn). We believe the company is riding multiple capex cycles. These
  include growth in biodiesel capacity in Malaysia and Indonesia, higher value-added
  products downstream, and expansion of customer base in Africa and Latin America. The
  largest growth opportunity will be the increasing use of sustainable aviation fuel oil
  using palm oil effluents in SE Asia.

• Oiltek has an enviable 31% ROE business that is asset-light and backed by net cash of
  RM132mn (~70% market cap). Its high returns stem from selling proprietary know-how
  and successfully designing, operating, and commissioning customer plants with a 45-
  year track record of project completions. We initiate coverage with a target price of
  S$0.70, or 15x PE FY24e. There are no direct comparables. We peg Oiltek at a discount
  to the engineering sector, which trades at 24x forward PE. FY24e EV/EBITDA is 1x.

Frasers Logistics & Commercial Trust – Dividend yield = 6%

The Europe- and Australia-focused Frasers Logistics & Commercial Trust (SGX: BUOU) owns 107 logistics & industrial (L&I) as well as commercial properties.

Valued at a total of S$6.9 billion, 99 of these properties are in the L&I segment meaning the REIT is primarily focused in the industrial space.

Frasers Logistics & Commercial Trust, also known as FLCT, saw an overall positive rental reversions of +9.8% (on an incoming vs outgoing basis) in Q3 FY2023 (for the three months ended 30 June 2023).

It has a low gearing ratio of just 28.6% and its cost of borrowing is also relatively low at just 2.0%. Its low gearing means the REIT has debt headroom of around S$3 billion to make accretive acquisitions if it wants.

At its current share price, FLCT shares are offering investors a 12-month forward dividend yield of 6%.

With commercial and retail properties that span Singapore, Hong Kong, China, South Korea, and Japan, the REIT’s share price is down around 12% so far in 2022.

AC Milan in Singapore

AC Milan fans, brace yourself! Join us for the exclusive meet and greet to get up close with club legend Daniele Massaro. Don't miss the opportunity to take a selfie with the Series A Trophy!

PUMA 313@Somerset Flagship Store

11 Nov, 6:30pm – 9pm

𝗖𝗮𝘁𝗰𝗵 𝗕𝗪𝗧 𝗔𝗹𝗽𝗶𝗻𝗲 𝗙𝟭® 𝗧𝗲𝗮𝗺 𝗗𝗿𝗶𝘃𝗲𝗿𝘀, 𝗙𝗲𝗿𝗻𝗮𝗻𝗱𝗼 𝗔𝗹𝗼𝗻𝘀𝗼 𝗮𝗻𝗱 𝗘𝘀𝘁𝗲𝗯𝗮𝗻 𝗢𝗰𝗼𝗻 @ 𝗜𝗢𝗡 𝗢𝗿𝗰𝗵𝗮𝗿𝗱

 

𝟰𝗽𝗺 𝗼𝗻 𝟮𝟵 𝗦𝗲𝗽𝘁 𝟮𝟬𝟮𝟮 (𝗧𝗵𝘂)
𝗔𝗹𝗽𝗶𝗻𝗲 𝗘𝘅𝗽𝗲𝗿𝗶𝗲𝗻𝗰𝗲 @ 𝗜𝗢𝗡 𝗢𝗿𝗰𝗵𝗮𝗿𝗱, 𝗟𝟭 𝗔𝘁𝗿𝗶𝘂𝗺

F1® Weekend is just around the next chicane. Join us to witness the official unveiling of the new Alpine A110 by two-time Formula One World Championship winner Fernando Alonso and winner of the 2021 Hungarian Grand Prix, Esteban Ocon.

Also, clock the fastest lap in our F1® racing simulator during the race week and stand to win autographed Alpine merchandise by the BWT Alpine F1® Team Driver. 🏅

Helping their shareholders beat inflation by increasing dividend payouts.

 

Sheng Siong (SGX: OV8) is a Singapore-grown supermarket chain with 66 outlets in our country. The company has also expanded into China to grow its business further.

For Sheng Siong’s first half of 2022, revenue dipped 0.7% year-on-year to S$676.8 million as COVID-19 measures were lifted earlier this year. The company explained that the easing “led to increased outdoor dining and overseas travel, especially during the June school holidays, which in turn returned sales revenue to more normalised pre-pandemic levels”.

However, despite the lower revenue, Sheng Siong’s net profit rose 2.1% to S$67.5 million for 2022 first-half. This resulted in its net profit margin improving from 9.7% to 10%.

The company has maintained its practice of paying stable dividends. For the latest period, Sheng Siong’s interim dividend per share increased to 3.15 Singapore cents, up 1.6% from 3.10 Singapore cents last year.

Sheng Siong shares are trading at S$1.63 each at the time of writing, translating to a P/E ratio of 18x and a dividend yield of 3.9%.

Consumers chose to dine at home to reduce excessive spending

 

•

Analysts positive on Sheng Siong as inflationary pressures rise (13 Jul 2022, The Business Times)

• With rising inflation, Sheng Siong Group will see an increase in demand for its groceries, as consumers switch to more economical home-cooked meals, rather than spend on dining out • The easing of Covid-19 restrictions, which has led to a moderation in demand, will be offset by a boost in inflation-induced demand for the value-for-money supermarket chain, as consumers choose to dine at home to reduce excessive spending

Ascott Residence Trust – Pick-up in demand upon relaxation

 

• No financials provided in this business update. 1Q22 RevPAU grew 22% YoY, currently at 65% of pre-pandemic levels, on the back of higher ADRs and occupancy.
  
  
  
• RevPAU declined 23% QoQ due to tightening of restrictions in Jan-Feb22 in several of ART's key markets due to resurgence of Omicron cases, seasonal lull, as well as three properties transitioning out of government block bookings.
  
  
  
• Maintain ACCUMULATE, DDM-TP raised from S$1.23 to S$1.24. FY22e-26e DPUs raised by 0.3-0.9% as we pencil in acquisition of Japan portfolio of rental housing and student accommodation assets, resulting in a slight increase in our DDM-TP. Catalysts include faster than anticipated recovery, opportunistic divestments and acquisitions of extended stay assets.

PropNex Ltd – More resilient than expected

• 3Q20 PATMI rose 10.6% YoY to S$6.8mn, far exceeding our forecast. 9M20 earnings form 111% of our FY20e forecast. Despite lockdown, new project revenue was more resilient than expected.
  
• Revenue from new projects rose 15% YoY to S$51.9mn. Higher market share, billing of earlier projects and successful virtual selling were some of the reasons.
• Net cash of S$94.7mn, up from 3Q19’s S$74.5mn.
• Maintain BUY with a higher DCF TP of S$0.85, from S$0.70. Circuit breaker might have affected resale and rental revenue but not new project sales. Yields of 6% and cash flows of S$28mn p.a. with modest capex and working-capital requirements are what we like about PropNex.

AmBank 'overweight' on Malaysia's glove makers

AMBANK has maintained its "overweight" call on Malaysia's glove sector and raised its fair value (FV) of Top Glove - the world's largest rubber glove maker.

This comes as it expects the sales volume and average selling price (ASP) of gloves to "grow exponentially" in the second-half year amid the Covid-19 pandemic, wrote AmBank analyst Nafisah Azmi in a sector report on Tuesday.

"We believe that selling prices will continue to soar in the next six months as lead time stretches up to 12 months. The glove companies' earnings will be further boosted by expanded margins as raw material prices remain low, selling prices continue to grow, US dollar (USD) continues to strengthen over the Malaysian ringgit (MYR), and expansion plans remain intact for the glove producers," said Ms Nafisah.

In the light of the recent spike in Covid-19 cases worldwide, AmBank has raised its ASP assumptions for Malaysia-listed glove producers including Top Glove, Hartalega and Kossan.

Top Glove – top performer

Malaysian glove maker Top Glove last week reported a 365% jump in net profit to RM348m and a 42% rise in revenue to RM1.69b for its third quarter ended 30 May thanks to a surge in demand for its gloves because of the virus pandemic.


Earnings per share was up from 2.92 sen to 13.59 sen. Its shares jumped 14 Singapore cents to S$5.70 on Friday on cum-dividend trading. The company is paying an interim dividend of 10 sen on 9 July.

Meet and Greet with Moses Chan, Ali Lee and Derek Chang

Date: Sunday, 3 November 2019
Time: 6pm
Venue: Causeway Point, Level 1 Atrium

 

Time to Play Defense

Netlink NBN Trust (SGX: CJLU) is the sole appointed “Network Company” for Singapore’s Next Generation National Broadband Network (NBN).


The trust group’s network, which spans nationwide, delivers high-speed internet access throughout Singapore. It also designs, builds, owns and operates passive fibre network infrastructure for Singapore’s NBN.


Netlink is listed as a business trust, which means that it does not have any restrictions on borrowing levels and it also pays out 100% of its cash available for distribution as a dividend.


Dividends paid out in FY18 amounted to 4.88 Singapore cents per share, which translates to a dividend yield of 5.4% at the last traded price of S$0.90.

Meet and Greet with Sung Hoon

Date: Friday, 27 September 2019

 
Time: 6pm


Venue: City Square Mall, Level 1 Atrium


 

Suntec REIT - Upgraded Stock

Amid the expectations of further cuts in interest rates, real estate investment trusts (Reits) should continue to perform well. Within the Reits sector, Suntec REIT is the top pick.


The analyst sees better earnings clarity from the flow through of positive rental reversions, completion of three development assets (9 Penang Road, Olderfleet and 21HS) by 1H20 as well as higher income contribution from two Australian asset acquisitions. Meanwhile, the recent placement that raised gross proceeds of $158.9 million (of which 79.5 percent of the gross proceeds are used to finance the Australian acquisitions) also removed an overhang of any imminent fund raising.


At the current share price of $1.94, Suntec REIT is trading at a price-to-book (P/B) value of 0.91 and a forward-FY19 distribution yield of 5.2 percent.

Open Press Conference (FREE Entry) - The Boyz Asia Fan-Con

The Boyz, one of the most anticipated rising K-pop group is coming to Singapore for their first Asia tour - The Boyz Asia Fan-Con [The Castle] in Singapore 2019!


Come meet The Boyz on 15th June (Saturday) at their Open Press Conference; 7:30pm at Gain City Megastore @ Sungei Kadut (FREE Entry)! - Queue begins at 5:00pm

Netlink NBN Trust: Your Go-To Stock For High Yield

According to DBS, the market is now on a search for high yield with the Fed turning more dovish. This contrasts with previous concerns on higher than expected 10-year bond yields.

Netlink NBN Trust is currently trading at approximately 6.3 percent FY20F yield compared to the average yield of 6.0 percent offered by large-cap industrial S-REITs. DBS notes that given the regulated nature of its business and no lack of debt headroom to fund acquisitions, Netlink NBN Trust should be trading at a lower yield. This means that there is room for Netlink NBN Trust’s share price to take off.

Moreover, one unique advantage of the over REITs and Business Trusts is that a potential rise in the cost of capital might lead to higher regulated returns from 2022 onwards, translating into higher distributions.