Fraser & Neave Holdings (F&N)

Recommendation: BUY | Target Price: RM36.30 | Upside: +44.0%

Fraser & Neave Holdings (F&N) reported a robust 1QFY25 performance, driven by improved sales growth in Thailand and flat sales in Malaysia. Despite a normalized tax rate, the company delivered within expectations. F&N’s dairy project, initially delayed due to local authority concerns over avian flu, is now back on track with infrastructure development progressing steadily. The company anticipates receiving livestock within the revised timeline or sooner.

Key Financial Highlights

• Revenue: RM1,389.7m (+10.6% qoq, +4.3% yoy)
• Core Net Profit: RM169.0m (+89.6% qoq, -1.6% yoy)
• Gross Profit Margin: Improved by 2ppt qoq to 32.7%
• EBIT Margin: Notable improvement of 7.6ppt to 15.4%

Segment Performance

In Malaysia, sales benefited from an earlier festive season sell-in and better sales mix, lifting operating profit by 23% yoy. Meanwhile, Thailand saw an 8.9% yoy sales increase driven by domestic recovery and promotional activities. Export sales remained muted but margins recovered sequentially.

Valuation

F&N trades at 20.3x FY25F PE, a steep discount compared to its consumer staples peers like Nestle and QL. The target price of RM36.30 reflects a DCF-based valuation with a WACC of 7.4% and terminal growth of 3.0%.

Sunway REIT (SREIT)

Recommendation: BUY | Target Price: RM2.05 | Upside: +9.6%

Sunway REIT reported in-line 4Q24 results, showcasing optimism for its retail segment in 2025 due to contributions from new asset acquisitions and refurbishment projects. The company announced a 5.3 sen dividend for 2H24, bringing the annual cumulative dividend to 10.0 sen (+7.5% yoy), representing a dividend yield of 5.3%.

Key Financial Highlights

• Revenue: RM210.6m (+9.6% qoq, +17.4% yoy)
• Core PAT: RM99.2m (+11.3% qoq, +26.5% yoy)
• Net Property Income: RM155.3m (+7.6% qoq, +24.7% yoy)

Segment Insights

The retail segment saw a 12.8% qoq growth with higher contributions from refurbished projects. The hotel segment faced a marginal decline of 4.7% qoq. Meanwhile, the office segment showed stable performance, albeit with minor qoq declines.

Outlook

Sunway REIT is strategically positioned for growth with diversification initiatives. A private placement may be on the horizon if the company proceeds with further acquisitions, given its elevated gearing ratio.

WuXi Biologics

Recommendation: BUY | Target Price: HK\$23.00 | Upside: +24.5%

WuXi Biologics remains a strong contender in the healthcare sector, despite slower-than-expected biotech funding and geopolitical headwinds. The delay of the BioSecure Act in 2024 offers a temporary reprieve, enabling the company to expand its global footprint and rebrand as an international player.

Key Financial Highlights

• Revenue Growth: Expected 5-10% in 2024
• New Projects: Increased from 132 in 2023 to 151 in 2024
• New Clients: 62 new clients in 2024, 50% from the US

Outlook

The company anticipates accelerated growth in 2025, driven by an expanding project pipeline and increasing client diversity. WuXi’s Ireland facilities are set to achieve profitability, further boosting its competitive edge.

Kasikorn Bank (KBANK)

Recommendation: BUY | Target Price: Bt190.00 | Upside: +18.4%

Kasikorn Bank announced its 2025 financial targets, emphasizing prudent lending practices and asset quality improvement. The bank aims for credit cost normalization and double-digit ROE by 2026. However, flat loan growth is expected for 2025, marking a period of portfolio cleaning.

Key Financial Targets

• NIM: 3.3-3.5%
• Credit Cost: 140-160 bps
• NPL Ratio: <3.25%

Initiatives

KBANK has partnered with asset management companies through joint ventures like Arun AMC and JK AMC to sell non-performing loans and improve asset quality. These measures are critical to achieving its financial targets.

SATS Ltd

Recommendation: BUY | Target Price: S\$4.00 | Upside: +19.3%

SATS faces challenges due to changes in the US de minimis tax rule but remains resilient with efforts to achieve over S\$8b in revenue and 15% ROE by FY29. Recent acquisitions of SAS Food Solutions Thailand and a portion of Menzies Aviation’s operations highlight its commitment to growth.

Key Financial Highlights

• Net Turnover: S\$5,715m in FY25F
• EBITDA: S\$1,022m in FY25F
• Net Profit: S\$266m in FY25F

Growth Strategy

SATS continues to focus on organic growth and bolt-on acquisitions to expand its market presence. The company’s strong financial performance in 3QFY25 is indicative of its resilience and strategic direction.