Comprehensive Company Analysis – UOB Kay Hian (February 17, 2025)
Date: February 17, 2025
Broker: UOB Kay Hian
Bank Rakyat Indonesia (BBRI IJ)
Recommendation: Buy
Bank Rakyat Indonesia, the largest micro-banking business in Indonesia, is undergoing a period of transformation as it prioritizes balance sheet cleanup and asset quality. Despite a 15% cut in its 2025 net profit estimates due to higher credit costs and slower loan growth, the bank remains a compelling investment opportunity.
Key Highlights
- 2024 net profit was Rp60.2 trillion, remaining flat year-on-year and meeting market expectations.
- Net interest margin (NIM) declined by 55 basis points quarter-on-quarter, resulting in a 4% decline in pre-provision operating profit (PPOP).
- Loan growth reached 7% yoy, while deposits were flat, driving the loan-to-deposit ratio (LDR) to 89%.
- Asset quality remains a top priority, with a significant write-off of Rp45.4 trillion in 2024 and an estimated Rp40 trillion for 2025.
- Credit cost is expected to remain elevated at over 3% in 2025, driven by a high Loan-at-Risk (LaR) ratio of 10.7%.
Financial Projections
- Net interest income is projected to reach Rp143.9 trillion in 2025 (+1.3% yoy).
- Net profit is forecasted at Rp57.7 trillion in 2025 but is expected to rebound strongly in 2026.
- The bank’s dividend payout ratio could exceed 85%, offering an attractive yield of 7.9% in 2025.
Despite short-term pressures, the bank’s long-term outlook remains positive, with an anticipated recovery in micro-loan growth from 2026.
Gas Malaysia (GMB MK)
Recommendation: Hold
Gas Malaysia is poised for a strong finish in 2024, with its upcoming 4Q24 results expected to showcase a net profit growth of 15% yoy. However, with the stock trading near its fair value, it has been downgraded to Hold.
Key Highlights
- 4Q24 net profit is projected between RM100 million and RM120 million, driven by a 10% increase in natural gas (NG) volumes and positive operating leverage.
- Total 2024 net profit is estimated at RM420 million, representing a 2% yoy growth for 2025.
- Cash flow remains robust, supporting an attractive dividend yield of 6%.
- Key risks include potential competition from new shippers entering the market as early as mid-2025.
Valuation
- Net profit for 2025 is forecasted at RM432 million, with a projected EPS of 33.6 sen.
- PE ratio stands at 11.3x, with a dividend yield of 6.4% for 2025.
The stock maintains an attractive dividend profile but faces limited upside potential.
Civmec (CVL SP)
Recommendation: Hold
Civmec, a multi-disciplinary construction and engineering services provider, reported 1HFY25 results below expectations, reflecting weaker margins and lower operating leverage. While the medium-term outlook remains positive, near-term challenges persist.
Key Highlights
- 1HFY25 net profit of A\$27 million (-17% yoy) missed estimates, forming 40% of full-year projections.
- Order book declined to A\$633 million from A\$853 million in FY24.
- Delays in project approvals ahead of the Australian election in May 2025 have impacted activity levels.
Valuation
- Target price revised downward to S\$0.98, reflecting 12x FY26F PE.
- 1HFY25 dividend yield remains robust at 5.7%, amid strong cash flow generation.
Civmec’s medium-term growth potential is intact, but near-term softness tempers investor enthusiasm.
Parkway Life REIT (PREIT SP)
Recommendation: Buy
Parkway Life REIT continues to demonstrate resilience, achieving its 17th consecutive year of uninterrupted dividend per unit (DPU) growth in 2024. Its recent acquisition of nursing homes in France further strengthens its portfolio.
Key Highlights
- Aggregate leverage improved to 34.8%, with no significant debt refinancing needs until September 2026.
- 87% of interest rate exposure is hedged, and JPY net income is secured until 1Q29.
- Potential growth catalysts include the acquisition of Mount Elizabeth Novena Hospital (MENH) and asset enhancement initiatives (AEI) for Gleneagles Hospital.
Valuation
- Target price set at S\$4.85, reflecting a 25.3% upside potential.
- 2025 DPU is forecasted at 17.7 cents, offering a yield of 4.6%.
PREIT remains a robust investment opportunity, with strong defensive attributes and growth potential.
SIA Engineering (SIE SP)
Recommendation: Buy
SIA Engineering continues to exhibit resilience, with 3QFY25 results in line with expectations. The company is maintaining a moderate pace of earnings recovery amid ongoing supply chain challenges.
Key Highlights
- 3QFY25 net profit rose to S\$38.2 million (+42% yoy), driven by strong growth in line maintenance activities at Changi Airport.
- Decent dividend yields of 4.5% and 4.9% are projected for FY25 and FY26, respectively.
- Proactive share buybacks have provided support to the stock price.
Valuation
- Target price maintained at S\$2.70, based on FY26 DCF valuation.
- SIA Engineering trades at 16.8x FY26F PE, offering an attractive entry point.
With a focus on operational recovery and strategic expansion, SIA Engineering remains a compelling buy.
Thai Beverage (THBEV SP)
Recommendation: Buy
Thai Beverage delivered a mixed performance in 1QFY25, with strong results in beer and non-alcoholic beverages (NAB) offset by underperformance in spirits. The stock remains attractively priced, with robust catalysts ahead.
Key Highlights
- 1QFY25 revenue grew by 2.4% yoy to Btm92.3 billion, driven by beer and NAB segments.
- Spirits segment revenue declined by 4.8% yoy, impacted by lower sales volume and rising costs.
- Strong balance sheet with deleveraging progress, as the net debt-to-equity ratio improved to 0.73x.
Valuation
- Target price of S\$0.56 implies a 12x FY25F PE, offering a 12% upside.
- Dividend yield for FY25 is forecasted at 5.4%.
With a potential BeerCo IPO on the horizon, Thai Beverage remains a compelling investment opportunity.
Delta Electronics (DELTA TB)
Recommendation: Sell
Delta Electronics faced a disappointing 4Q24, with earnings missing estimates due to lower gross margins and higher SG&A expenses. The stock has been downgraded to Sell amid concerns over slower earnings growth.
Key Highlights
- 4Q24 net profit plunged 54% yoy to Btm2.2 billion, 60% below expectations.
- Gross margin fell to 22.5%, pressured by forex losses and rising costs in the EV sector.
- SG&A-to-sales ratio increased to 16.9%, driven by higher legal and R&D expenses.
Valuation
- Target price reduced to Bt99.00, reflecting a 12.4% downside.
- Dividend yield for 2024 stands at a modest 0.41%.
Delta Electronics faces multiple headwinds, making it a less attractive investment option at this time.
Thai Oil (TOP TB)
Recommendation: Hold
Thai Oil rebounded in 4Q24 with a net profit of Bt2.8 billion, driven by improved market gross refinery margins (GRM). However, concerns over the Clean Fuel Project (CFP) timeline continue to weigh on its outlook.
Key Highlights
- 4Q24 market GRM recovered to US\$7.1/bbl from US\$5.4/bbl in 3Q24.
- 2024 net profit declined by 49% yoy to Bt9.6 billion, reflecting weaker petrochemical spreads.
- An additional US\$1.78 billion investment in the CFP will be discussed at an EGM on February 21, 2025.
Valuation
- Target price maintained at Bt27.00, reflecting a 9.76% upside.
- Dividend yield for 2024 stands at 7.7%.
While Thai Oil offers some upside, delays in the CFP remain an overhang on the stock.
Plan B Media (PLANB TB)
Recommendation: Buy
Plan B Media announced strategic transactions to acquire Hello LED and manage VGI’s out-of-home (OOH) assets. These moves are set to strengthen its market position and drive long-term growth.
Key Highlights
- Acquisition of Hello LED for Bt4 billion will add significant media capacity, particularly in static billboards.
- Exclusive rights to manage VGI’s OOH assets will enhance advertising reach and portfolio value.
- Projected EPS upside of 4% in 2025, with minimal business risk due to PLANB’s expertise in static media.
Valuation
- Target price set at Bt9.00, implying a 26.76% upside.
- DCF valuation reflects robust long-term growth potential.
Plan B Media’s strategic expansions position it as a leader in Thailand’s OOH advertising market.
