Maybank Kim Eng Kopi-O (19 Aug 2021) MKE Key Calls Singapore | Info Pelaburan Saham - Maybank Investment Bank Ipoh

Maybank Kim Eng Kopi-O (19 Aug 2021)

MKE Key Calls
Singapore REITs - From Delta to Alpha
S-REITs have lagged the market’s YTD recovery despite improving fundamentals. Industrial REITs remain our preferred exposure given resilient DPUs, stronger AUM profiles, and multiple catalysts. Office REITs have pulled back to offer a better risk-reward amid recovering Grade A rents, further overseas diversification, and Singapore’s clearer reopening pace. The push into new economy and longer WALE AUMs will underpin DPU visibility, while sound balance sheets should support acquisition upside.

MY
o The selloff in overnight Wall Street, falling commodity prices as well as political uncertainty on the domestic front would trigger anxieties amid the already weakened market sentiment. Appetite for risky assets will also stay tepid ahead of earnings season. Technically, we expect the KLCI to range between 1,510 and 1,550 today, with supports at 1,470 and 1,450.

o Berjaya Food (BFD MK): BFD’s 4QFY21 results were ahead of our/consensus expectations on EBIT margin expansion led by a one-off deferred revenue recognition and lower-than-expected effective tax rate. Sequential earnings could be weaker given adverse impact from the FMCO but 2H22 should experience stronger sales momentum once lockdown measures ease. Reiterate BUY with an unchanged TP of MYR2.35 (18x FY22 PER, about -0.5SD to mean), following our FY22/FY23 earnings adjustment of -1%/+3%.

o Kelington (KRGB MK): Its wholly-owned subsidiary Kelington Engineering (S) Pte Ltd was awarded a contract worth approximately MYR45m from a global leader in engineering and project management of high-technology facilities to undertake ultra-high purity works for GlobalFoundries’ new semiconductor fabrication plant in Singapore. With the latest project win, the group has secured approximately MYR264m worth of new orders in 2021, lifting its outstanding order book to MYR523m (equivalent to about 1.3x its FY20 revenue). Stock trades at 24.5x consensus FY22 EPS.

o Destini (DSTN MK): Its wholly-owned subsidiary Destini Oil Services S/B was awarded a contract to provide tubular handling and conductor installation equipment and services for Repsol Oil & Gas Malaysia Ltd. The contract is for a two years period. With the latest award, DSTN has an order book of about MYR486.6m for its energy division, equivalent to about 2.6x its FY20 revenue. A strong pipeline is crucial to sustain its profitability. DSTN returned to the black in 1Q21 after slipping into losses in 2019. Stock trades at 16.5x consensus FY22 EPS.

o Widad (WGB MK): Its wholly-owned subsidiary Widad Builders S/B was awarded a contract by the Public Works Department to build a school and relevant facilities at SMK Bukit Mahkota at Bangi, Selangor. The project, which is worth MYR53.2m, is for a period of 132 weeks. WGB is also in the midst of acquiring Palm Shore Holdings S/B, which is involved in renovations contracting. On its IFM, the group has completed the acquisition of Serendah Heights S/B in Mar 2021.

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