In-Depth Analysis of Market Trends and Company Performances

Broker Name: Lim & Tan Securities

Date of Report: 22 November 2024

Overview of Financial Markets

In the latest report by Lim & Tan Securities, the financial markets have shown a mixed bag of results. The FSSTI Index closed at 3,739.2, showing a modest year-to-date increase of 15.4%, although it experienced a slight 0.1% decline over the last day. Other major indices such as the INDU Index and SPX Index have shown significant year-to-date growths of 16.4% and 24.7%, respectively, indicating a bullish trend supported by Trump’s tax cuts and stimulus measures.

BRC Asia Limited: A Resilient Performer

BRC Asia Limited, a leading steel reinforcement solutions provider in Singapore, has announced its financial results for FY2024. Despite a 9% year-on-year decline in revenue due to weakening steel prices, the company managed to maintain stable profitability. The revenue stood at S\$1.5 billion, while gross profit increased by 11% to S\$153.8 million, driven by the higher-margin steel fabrication segment.

Other income saw a 56% year-on-year surge to S\$22.5 million, aided by gains from the disposal of PrisƟne Islands Investment Pte Ltd and fair value gains on investment securities. Operating expenses rose by 16% to S\$63.9 million, primarily due to increased administrative costs and professional fees. Nevertheless, the net profit attributable to shareholders reached a record high of S\$93.5 million, marking a 23% year-on-year increase.

The company declared a total dividend of 20 Singapore cents, representing a dividend payout ratio and yield of 59% and 8.4%, respectively. With a robust sales order book and strong fundamentals, BRC Asia remains a promising investment opportunity. Lim & Tan Securities maintain an “Accumulate” rating on BRC Asia, given its attractive 8.4% dividend yield and P/E ratio of 7x.

Thai Bev: Stable Amidst Challenges

Thai Bev reported a 2.2% increase in total sales revenue to Baht 340,289 million for the year ended 30 September 2024. The growth was primarily driven by an increase in sales of spirits, beer, non-alcoholic beverages, and food businesses. However, a decrease in sales from the publishing and printing business partially offset these gains.

The company’s gross profit rose by 4.6% to Baht 103,208 million, supported by higher profits across its business segments. Despite a slight 0.8% decline in attributable profit to shareholders, Thai Bev’s market cap stands at S\$10.4 billion, trading at 12.2x forward P/E and 2.2x P/B, with a dividend yield of 4.6%.

The consensus target price for Thai Bev is S\$0.67, indicating a 30.1% upside from its current share price. The company remains focused on its core F&B business, with an emphasis on leveraging F&N. Lim & Tan Securities recommend an “Accumulate” rating for Thai Bev, citing its undemanding valuations.

Market Trends Impacting US, Hong Kong, and China

The report highlights significant macro market news affecting the US, Hong Kong, and China markets. US consumer sentiment has shown resilience, driven by strong consumer spending post-COVID recovery. However, rising inflation expectations could pose challenges, potentially halting the Fed’s rate-cutting campaign.

In Hong Kong and China, the property market is experiencing a downturn, reminiscent of the Asian financial crisis of 1997. This has resulted in significant defaults in the commercial real estate sector, impacting financial institutions. Meanwhile, China’s wealthy individuals have been liquidating their luxury properties amidst the economic slowdown.

Upcoming Dividends and Corporate Actions

The report lists several companies with upcoming dividends and distributions, including Riverstone, The Hour Glass Ltd, SIA, and ST Engineering. Notable dividends include Thai Bev’s final dividend of THB47c, indicating the company’s commitment to delivering shareholder value despite challenging market conditions.

Conclusion

Lim & Tan Securities’ report provides a comprehensive overview of the current financial markets and detailed analyses of key companies such as BRC Asia and Thai Bev. Despite the challenges posed by market volatility and economic uncertainties, these companies have shown resilience and promise for future growth.