Friday, December 13th, 2024

Singapore Post Stock: Why Analysts Say BUY Despite S&P Credit Watch

In-Depth Analysis of Investment Opportunities from Maybank Research – 9 December 2024

Broker Name: Maybank Research Pte Ltd

Date of Report: 9 December 2024

Singapore Post (SPOST SP): An Opportunity for Strategic Gains

Singapore Post, despite its recent credit watch downgrade by S&P, presents a compelling investment opportunity. The company’s decision to divest its Australian business and other assets like Famous Holdings and SingPost Centre is expected to boost its cash position to SGD1.3bn, surpassing its existing debt of SGD1.1bn. This strategic move opens the door for potential dividends of SGD0.86/share, offering a significant 46% upside compared to its current trading price of SGD0.59. Jarick Seet from Maybank Research reiterates a BUY recommendation on SingPost, emphasizing the company’s potential for restructuring and special dividends as rewards for shareholders.

Singtel: Leveraging Strategic Investments

Hussaini Saifee highlights Singtel’s strategic advantage with its 22% stake in SingPost. This investment is set to yield approximately SGD300m in capital inflows, enhancing Singtel’s cash reserves for potential returns. Singtel’s ST28 strategy is projected to result in about SGD4.3b excess capital, providing an opportunity for share buybacks. With ongoing strategic divestments, Singtel remains a strong BUY recommendation.

Vietnam Banks: Investment Amidst Market Corrections

In Vietnam, Quan Thanh sees value in the banking sector after a significant correction in November. He advises investing in banks that focus on growth rather than conservative strategies, specifically recommending TCB, VCB, MBB, and VPB. This approach is likened to the polarizing taste of durians—either appealing or not, but currently presenting a worthwhile opportunity.

ASEAN Internet – Xanh SM: Impact on the Mobility Sector

Vietnam’s Xanh SM, an electric taxi operator, is set to intensify competition in Indonesia’s mobility sector. Despite potential impacts on major players like Grab and GoTo, these remain manageable. The report maintains strong BUY ratings on Grab and GoTo, suggesting continued confidence in their market positions despite new entrants.

Marco Polo Marine: Anticipating Prosperous Times

Marco Polo Marine’s fiscal year 2024 core profit of SGD26.3m aligns with forecasts, yet the company stands on the brink of exciting developments. With its CSOV nearing completion (91% done) and operations expected by March 2025, utilization rates are projected to be high, around 95% for the first two years. Charter rates are expected to rise by 5-10%, and improvements in manpower shortages suggest a rebound in third-party repairs by FY25E. Maybank Research maintains a BUY recommendation with a target price of SGD0.08 based on a 10.5x FY25E P/E.

ASEAN Valuation Reset: A Strategic Portfolio Rebalance

MSCI ASEAN valuations have retreated to the 25th percentile of their five-year range, suggesting undemanding valuations for the export bloc. This reflects potential challenges in a Trump 2.0 environment. The report favors quality growth names focusing on consumption, health, financials, and AI/tech-related plays, positioning these as ideal for portfolio rebalancing.

LHN Ltd: A Stellar Performance in Co-Living

LHN Ltd exceeded expectations with a FY24 core PATMI of SGD29m, driven by robust demand in its co-living segment, achieving a 97.5% occupancy rate. The group has declared a final and special DPS of 1.0c each, translating into a 7.0% annualized yield. The report upgrades its FY25-26E estimates by 21-22% and introduces a FY27E forecast, raising the target price to SGD0.55 based on a 7x forward P/E. A BUY recommendation is reiterated.

Singapore REITs: Navigating the Yield Curve

Singapore REITs faced ongoing themes of healthy reversions and steady occupancy amidst rate and FX headwinds. Despite these challenges, recent declines have increased yield spreads to 350bps, higher than historical ranges. The report maintains a positive stance on the sector, recommending top picks such as CDLHT, CICT, CLAR, CLAS, FEHT, LREIT, MINT, MLT, and OUEREIT.

CapitaLand Investment Ltd: A Vision for Growth

CapitaLand Investment Ltd reaffirmed its commitment to strong growth and profitability during its recent Investor Day. It aims to double its FUM to SGD200b by 2028 and increase operating earnings by over 2x. The company plans to achieve this through private funds and REIT platform expansion, both organically and inorganically. The report maintains a BUY rating with an SOTP-based target price of SGD3.30, emphasizing the importance of execution, exits, and efficiency.

In conclusion, Maybank Research’s 9 December 2024 report offers a comprehensive analysis of varied investment opportunities across different sectors, providing in-depth insights and strategic recommendations for investors.

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