Comprehensive Analysis of Singapore’s Financial Markets: A Deep Dive into Key Companies

Broker Name: Lim & Tan Securities

Date of Report: 26 November 2024

Overview of Financial Markets

In a dynamic landscape, Singapore’s financial markets have shown a mixed performance. The FSSTI Index experienced a minor decline of 0.4% to close at 3,731.4 points, while other major indices like the INDU and SPX Indexes exhibited gains. This fluctuation is largely attributed to global economic trends, including optimism over the U.S. administration’s pro-growth policies.

Key Company Analysis

SATS Ltd

SATS Ltd, a global leader in gateway services and a prominent food solutions provider in Asia, has announced a strategic alliance with Avilog Logistics Services Company. This partnership, a joint venture with Albawardi Holding Group and Abdulkadir Al Muhaidib and Sons Company, aims to capture emerging opportunities in Saudi Arabia’s booming aviation and logistics sector. AVILOG will acquire a 49% stake in SATS Saudi Arabia, strengthening its position in line with Saudi Vision 2030. SATS is capitalized at S\$5.74 billion, trading at 2.3x book and 21x forward PE with a dividend yield of 0.8%. While the strategic partnership holds promise, SATS’ valuations are considered high, prompting a “Hold” recommendation.

Sembcorp Industries

Sembcorp Industries, through its subsidiary Sembcorp Green Infra Private Limited, has secured a 300MW wind-solar hybrid power project from NTPC Ltd. This project is part of a larger 1.2GW bid and aligns with Sembcorp’s shift towards renewable energy. The company’s gross renewables capacity in India now stands at 5.4GW, contributing to its global capacity of 16GW. Trading at 10.0x P/E and 1.8x P/B with a dividend yield of 2.7%, Sembcorp Industries is seen as a promising investment, with a consensus target price indicating a 31% upside. The recommendation is to “Accumulate.”

17LIVE Group Limited

17LIVE Group Limited has enhanced its virtual IP business through the acquisition of mikai Inc., a Japanese entertainment startup known for its VTuber production company, Re:AcT. This acquisition is a strategic component of the 17LIVE Forward Strategy, designed to diversify revenue streams and expand its virtual influencer portfolio. The company is valued at S\$176 million, trading at 14.6x forward P/E and 1.4x P/B, with a potential upside of 82%. The acquisition is not expected to significantly impact the company’s financials for the year ending December 31, 2024.

Recent Market Movements

Recent weeks have seen China’s government introduce aggressive measures to stabilize the property market, which has faced significant challenges since 2021. These measures include mortgage rate cuts and the easing of restrictions on home purchases. While new home prices continue to decline year-on-year, there are signs of stabilization, with a narrowing monthly rate of decline. Retail sales in China have increased, boosting optimism for economic recovery.

Institutional and Retail Fund Flows

The week of November 11, 2024, saw institutional investors increase their net buying, while retail investors showed a net selling trend. Major institutional buys included stocks like DBS and OCBC, while Genting Singapore and SIA were popular among retail investors. These movements reflect broader market sentiments and strategic shifts in investment focus.

Dividend Announcements

Several companies have announced dividends, including SIA and ST Engineering, with respective interim dividends payable in December. Investors can expect continued returns from these firms, which highlights their stable financial positions and commitment to shareholder value.

Conclusion

The Singapore financial markets exhibit a blend of strategic partnerships, renewable energy shifts, and innovative acquisitions shaping the future of key companies. While market fluctuations present challenges, strategic growth initiatives and government interventions provide a path for potential recovery and growth. Investors are advised to consider these dynamics when making investment decisions, keeping an eye on valuation metrics and growth strategies.