Comprehensive Analysis of SGX-Listed Companies

Broker: Lim & Tan Securities

Date of Report: December 5, 2024

CapitaLand Investment Limited: Strategic Growth in Japan

CapitaLand Investment Limited (CLI) has been making significant strides in the self-storage sector through its strategic partnership with Extra Space Asia (ESA) and Ambitious Co. Ltd., Japan’s largest indoor self-storage manager. ESA aims to expand its portfolio in Japan by leveraging Ambitious’ expertise to manage facilities in Osaka and Tokyo. These regions are Japan’s largest markets for self-storage, with ESA acquiring four facilities in Osaka and planning two more in Tokyo by 2025. The partnership is expected to triple ESA’s portfolio to over JPY12 billion in the near term, driven by the increasing demand for storage space due to e-commerce growth and urbanization.

ESA’s properties in Japan boast a high average occupancy of 92%, indicating robust demand. With a strategic right of first refusal on future assets and partnerships with Keiyo Logistics, ESA is poised to become a dominant player in Japan’s self-storage market. CLI’s “Accumulate” rating reflects its asset monetization strategy, recycling capital from mature assets to higher growth opportunities, with a consensus target implying a 29% potential return.

OKH Global Ltd.: A Strategic Acquisition

OKH Global Ltd. has entered into a conditional sale and purchase agreement to acquire Chip Eng Seng Construction Pte. Ltd. from Acrophyte Pte. Ltd., with a price of up to S\$118.5 million. This acquisition is expected to revitalize OKH Global Ltd., positioning it as a leading player in the construction industry. The acquisition will be satisfied through the issuance of new shares, representing a 212.43% premium over recent prices, and will result in Acrophyte Pte. Ltd. becoming the controlling shareholder.

The transaction is viewed as synergistic, providing OKH with access to a broader spectrum of construction capabilities and certifications, enabling it to participate in a wider range of tenders. Despite being dilutive to current shareholders, the acquisition aligns with OKH’s strategy to capitalize on robust demand in the building sector. The company aims to leverage the Target Group’s outstanding order book worth over S\$2 billion, significantly exceeding other Singapore-listed companies.

Market Dynamics and Investor Movements

The report highlights significant institutional and retail investor activities within the Singapore market. Occluent institutions have shown interest in companies like Yangzijiang Shipbuilding, OCBC, and Keppel, while retail investors focused on DBS, OCBC, and ST Engineering. The data indicates a positive shift in net buys among institutional and retail investors, reflecting confidence in specific sectors and companies.

Impact on the Broader Market

The analysis further delves into macroeconomic factors affecting the US, Hong Kong, and China markets. The prospect of electrification in China, especially with the rise of electric vehicles, is expected to drive a decline in petrol demand, influencing global oil market dynamics. Meanwhile, US bond strategists anticipate volatility in yields amidst a potential recession, advising investors to maintain above-benchmark duration in bonds over a 6-to-12 month horizon.

Dividend Announcements

The report also lists upcoming dividend announcements, including interim and final dividends from companies such as KSH, Old Chang Kee, and UMS Holdings Ltd., providing essential information for investors seeking income-generating opportunities.

Conclusion

Lim & Tan Securities’ comprehensive analysis provides valuable insights into the strategic maneuvers of SGX-listed companies, highlighting opportunities and challenges in the current market environment. Investors are encouraged to consider these dynamics when making informed decisions about their portfolios.