OCBC Investment Research: Comprehensive Market Analysis

Date: 25 Nov 2024

The financial landscape is continuously evolving, and OCBC Investment Research provides an insightful analysis of key market trends and company performances. Let’s dive into the detailed examination of notable companies and their strategic positioning in the current market climate.

PropNex Ltd (PROP SP): A Stronger 2H24 Indeed

PropNex Ltd has experienced a remarkable surge in new private home sales, reaching an 11-month high in October 2024, with expectations for November to exceed these figures. Key new launches such as Chuan Park and Emerald of Katong have invigorated the market, selling 76% and 99% of their units, respectively. The rise in market activity has prompted OCBC to raise PropNex’s fair value estimate to SGD0.960. However, despite a 17.1% increase in share price since the initial recommendation, OCBC has revised the rating from ‘BUY’ to ‘HOLD’, citing a less attractive risk-reward profile at current levels. Despite this, PropNex remains a solid dividend yield play, with forecasted dividend yields of 5.6% for FY24 and 6.1% for FY25.

ESG Initiatives

PropNex is committed to good business practices and environmental sustainability. The company is notable for being the first real estate agency with a formalized framework supported by the Singapore Industrial and Services Employees’ Union, emphasizing welfare, professionalism, and industry standards. PropNex’s dedication to sustainability is evident through initiatives like a zero-tolerance policy on single-use plastics and the adoption of digital name cards and e-invoicing.

First Solar Inc (FSLR US): Mixed Prospects Under New Administration

First Solar faces uncertainty following Trump’s victory, which impacts the renewable energy sector. Concerns arise from potential changes to clean energy subsidies, though the firm’s competitive position could benefit from Trump’s trade policies. The possibility of new tariffs on solar module imports from regions like China and Southeast Asia could give First Solar an edge in the U.S. market. Nonetheless, pricing headwinds from India and potential stagnation in the U.S. utility-scale solar market pose short-term challenges. Despite these hurdles, the firm stands to benefit from the increasing demand for renewable energy driven by AI advancements. The fair value estimate has been adjusted from USD331 to USD297.

ESG Outlook

First Solar fares well in areas like “Opportunities in Clean Tech” and “Governance,” but needs improvement in “Human Capital Development.” The company is poised to capitalize on clean technology growth, especially with its new series of solar modules incorporating 16% recycled materials. However, its operations are vulnerable to water stress in regions like the U.S. and Vietnam. The recommendation remains a ‘BUY’.

Xiaomi Corp (1810 HK): Strong 3Q24; EV Margin Another Beat

Xiaomi Corp has demonstrated robust performance in Q3 2024, with noteworthy progress in its electric vehicle (EV) margin. The company’s strategic initiatives continue to strengthen its position in the competitive tech market. OCBC maintains a ‘BUY’ rating with a fair value of HKD 35.50, highlighting Xiaomi’s potential for sustained growth and market leadership.

Frencken Group (FRKN SP): Cultivating Growth Levers

Frencken Group is actively positioning itself for a turnaround by leveraging growth levers. The company’s strategic focus on innovation and market expansion is expected to drive future success. With a ‘BUY’ recommendation and a fair value of SGD 1.42, Frencken is poised for a positive trajectory as it navigates the competitive landscape.

PetroChina Co Ltd (857 HK / 601857 CH): Gas Pricing Reform

PetroChina is undergoing significant gas pricing reforms, which are anticipated to enhance its market competitiveness. With a ‘BUY’ rating and fair values of HKD 8.51 and CNY 11.10 for its Hong Kong and China listings, respectively, PetroChina is well-positioned to capitalize on the evolving energy sector dynamics.

Singapore Exchange Ltd (SGX SP): Sustained Earnings Growth

Singapore Exchange Ltd continues to exhibit strong derivatives momentum, supporting sustained earnings growth. Despite a ‘HOLD’ rating with a fair value of SGD 12.21, SGX remains a key player in the financial market, offering stability and growth potential amid fluctuating market conditions.

Trip.com (9961 HK / TCOM US): Travel Momentum Continues

Trip.com is experiencing continued momentum in the travel sector, reinforcing its market position. With a ‘BUY’ recommendation and fair values of HKD 677.00 and USD 87.00 for its Hong Kong and U.S. listings, Trip.com is poised for further expansion as global travel rebounds.

Jiangxi Copper Co Ltd (358 HK / 600362 CH): Below Expectations

Jiangxi Copper’s recent performance fell below expectations, yet the company remains a valuable player in the copper industry. With a ‘BUY’ rating and fair values of HKD 21.00 and CNY 27.80, Jiangxi Copper is expected to recover as market conditions stabilize.

Keppel Infrastructure Trust (KIT SP): Keeping Both Oars in the Water

Keppel Infrastructure Trust is maintaining stability with strategic initiatives to ensure steady growth. With a ‘BUY’ rating and a fair value of SGD 0.51, the trust is well-positioned to navigate the complexities of the infrastructure sector.

Alibaba Group (9988 HK / BABA US): In-line Results with Improving Metrics

Alibaba Group’s recent results align with expectations, showcasing improving operating metrics. With a ‘BUY’ recommendation and fair values of HKD 120.00 and USD 123.40, Alibaba remains a dominant force in the e-commerce sector, poised for continued growth.

Singapore REITs: Expect Risk-Off Sentiment

Amid elevated yields, Singapore REITs are anticipated to experience a risk-off sentiment. Investors are advised to remain cautious as market dynamics evolve, impacting investment strategies in the REIT sector.

ComfortDelGro Corporation (CD SP): Acquisition-Fueled Growth

ComfortDelGro is leveraging acquisitions to fuel its growth trajectory. With a ‘BUY’ rating and a fair value of SGD 1.67, the company is strategically expanding its footprint in the transportation sector, offering potential for long-term returns.

Boustead Singapore (BOCS SP): Bottom Line Beat

Boustead Singapore has delivered a bottom-line beat despite global challenges. With a ‘BUY’ recommendation and a fair value of SGD 1.39, Boustead is poised to capitalize on its strategic initiatives, driving future growth.

JD.com (9618 HK / JD US): Beneficiary of Consumer Subsidies

JD.com stands as a key beneficiary of consumer goods subsidies, enhancing its market position. With a ‘BUY’ recommendation and fair values of HKD 210.00 and USD 54.00, JD.com is well-positioned for sustained growth in the e-commerce landscape.

HSBC (5 HK / HSBA LN): Fine Tuning Estimates

HSBC is fine-tuning its estimates to adapt to market changes, maintaining a ‘BUY’ rating with fair values of HKD 86.00 and GBp 867.18. The bank remains a significant player in the financial sector, offering stability and growth potential.

Tencent Holdings (700 HK): Revenue Growth Drivers

Tencent Holdings is exhibiting in-line revenue growth with visible growth drivers ahead. With a ‘BUY’ rating and a fair value of HKD 560.00, the company is poised to capitalize on its strategic initiatives in the tech sector.

Singtel (ST SP): Increasing Dividends

Singtel is progressively increasing dividends, signaling confidence in its growth prospects. With a ‘BUY’ recommendation and a fair value of SGD 3.85, Singtel remains a strong player in the telecommunications sector.

Bumitama Agri Ltd (BAL SP): Longer Winter

Bumitama Agri Ltd is experiencing a longer than expected winter, impacting its performance. Despite a ‘HOLD’ rating with a fair value of SGD 0.815, the company is poised to navigate market challenges, focusing on long-term growth.

Sea Limited (SE US): Strength to Strength

Sea Limited continues to grow from strength to strength, with a ‘BUY’ rating and a fair value of USD 135.00. The company remains a formidable player in the digital entertainment and e-commerce sectors, poised for further expansion.

Seatrium Limited (STM SP): Return to Profit

Seatrium Limited is making a return to profit, with strategic initiatives driving its success. With a ‘BUY’ recommendation and a fair value of SGD 2.64, Seatrium is poised for continued growth in the maritime sector.