Alpha Edge Investing

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MQ: Politburo meeting shifts the priority from regulatory tightening to supporting growth

This Monday, the People’s Bank of China (PBoC) did a 50 basis point broad-based reserve requirement ratio (RRR) cut, releasing RMB1.2 trillion yuan (US$188 billion) in long-term liquidity to bolster slowing economic growth. The world’s second-largest economy, which staged an impressive rebound from last year’s pandemic slump, has lost momentum in recent months as it […]

BB: Evergrande Crisis Is No Lehman Moment for Rising Chinese Markets

By Richard Frost December 8, 2021  China’s stocks, junk dollar bonds and yuan all advance  Evegrande has failed to pay interest on bonds by deadline For all the warnings earlier this year that China Evergrande Group’s debt crisis would become the country’s Lehman moment, the developer’s landmark payment failure on Monday is barely registering in local financial […]

BB: Omicron Threat May Be Countered With Extra Dose of Covid Vaccine

By Jason Gale December 8, 2021  S. African, Swedish tests give early gauge of immunity level  Cautious optimism that immune protection loss is not complete The earliest studies on omicron are in and the glimpse they’re providing is cautiously optimistic: while vaccines like the one made by Pfizer Inc. and BioNTech SE may be less powerful against the new variant, […]

KE: Malaysia Software & Tech Services – ASEAN Snapshot | U/G POSITIVE

Global growth numbers have been robust across multiple companies within the digital economy sector, naturally favouring larger companies given their advanced scale/network economies. The pandemic is now shifting investor attention to companies in the previously-underappreciated SEA digital economy space. According to Bain, Google and Temasek (BGT) research, the SEA digital marketplace is on track to […]

UOBKH: Dairy Farm Int’l Holdings – BUY TP US$3.60

China Malaise Not Confined To The Tech Sector The high base in 2020, which was positively affected by panic spending and government support, means that DFI has a tough act to follow. Increased levels of competition in China have hurt its key associate Yonghui, and positive yoy performances from some of its segments do not […]

UOBKH: Technology – Malaysia (Market Weight)

Risk-Reward Is Less Compelling; Valuations Pricing In Strong Expectations While the sector is still benefitting from a twin supply-demand shock alongside the supply chain reconfiguration, industry risk-reward is less compelling with valuations pricing in strong earnings expectations. Meanwhile, industry indicators are also showing signs of growth moderation. We like INARI and Greatech for their unique […]

UOBKH: Property – Malaysia (Market Weight)

Stay Selective Amid Lack Of Near-term Catalysts Developers’ 9M21 earnings were largely in line except for Mah Sing and UEMS. The increase in material cost has had minimal impact on developers. The anticipated robust sales in 4Q21 with pent-up demand could lead to a strong earnings recovery in 2022. However, sales may normalise or potentially […]

UOBKH: China Internet (Market Weight) – Alibaba,

Not Out Of The Woods Yet China’s slowing e-commerce tangible goods’ GMV growth (+8.7% in 3Q21 vs 3Q20’s +16.2%) and intensifying competition dragged traditional e-commerce companies’ GMV growth in 3Q21 with Alibaba taking the most impact. Consumer staples categories to continue to outperform the non-essential categories as the resurgence of the pandemic will prompt consumers […]


Energy Demand Boost Imports China’s exports growth softened to 22% yoy in Nov 21, but still grew at a faster-than-expected rate ahead of the year-end holiday, while imports growth surprised on the upside, surging to 31.7% yoy as domestic production rebounded on the easing power crunch. Despite resilience in overseas shipments alongside accelerations in imports […]

KE: Malaysia REITs – 3Q21 results round-up | NEUTRAL

M-REITs’ 3Q results were mostly below expectations, with average core net profit decline -15% YoY, especially for those with high exposure to retail and hotel assets. However, earnings continue to be supported by the long term leases of office and industrial segments. We expect an earnings recovery in 4QCY21. We remain NEUTRAL on the sector. […]

CIMB: Malaysia Property Development (Neutral) – Sime Darby Property, SP Setia

Green building, building green ■ Mandatory building energy codes, green-certified buildings and higher IBS adoption are key to decarbonising Malaysia’s buildings & construction space.■ Developers may prefer green commercial/industrial buildings given higher marketability and selling price premium vs. green residential buildings.■ SP Setia and Sime Darby Property are poised to benefit from the growing demand […]

UOBKH: Monthly Technical Regional Indices Watch

MONTHLY TECHNICAL REGIONAL INDICES WATCH – INDICES OUTLOOK In this report, we provide the monthly outlook for regional indices, namely the Hang Seng Index, the FTSE Bursa Malaysia Kuala Lumpur Composite, the Jakarta Stock Exchange Composite Index, the Stock Exchange Of Thailand Index and the FTSE Straits Times Index. We also include a list of […]

CIMB: Trendspotter – Wilmar

Idea of the Day – TrendspotterSG – Wilmar Intl (Technical Buy): bottoming out? Key Things to note (overnight recap)(Bloomberg) — U.S. equities rebounded from Friday’s selloff as investors took comfort in reports that cases of the omicron variant have been relatively mild. The S&P 500 rose 1.2%, erasing last week’s losses, while the technology-heavy Nasdaq […]

DBS: Hang Lung Properties Ltd – BUY TP HK$25.75

News Alert: The Aperture goes on sale Released The Aperture in Kowloon Bay onto the market for sale The project offers easy transportation accessibility First new residential project in the area for over 30 years  Hang Lung Properties is offering the first batch of 100 units at The Aperture for pre-sale at ASP of HK$21,548psf, […]

DBS: Towngas China Company Ltd – BUY TP HK$6.80

Becoming the flagship of Hong Kong & China Gas in smart energy business in China Towngas Smart Energy (1083 HK): Becoming the flagship of Hong Kong & China Gas in smart energy business in China Acquisition of its parent’s smart energy business for a total consideration of Rmb509.2m, equivalent to 1.02x attributable net asset value, […]

DBS: MMG Ltd – BUY TP HK$5.30

<News Alert!> Las Bambas mine to shut down due to a road blockage MMG to cease production by mid-Dec due to a lack of key consumables  Squeezed between the Peru government and local community Conflict with the local community, a key risk for sustainable operation in Las Bambas  Inevitable negative impact on 2021 earnings, under […]

DBS: China Education Group Holdings Ltd – BUY TP HK$18.70

Meeting takeaways: China Education Group POA Management presentation  Strong student enrollment growth: 16% organic growth in student enrollment in FY21  36,000 new capacity added in Sep 2021. Currently four schools in GBA with c.70,000 total enrollment. Expect total student number in GBA to exceed 100,000 in the next two years  Post-acquisition management track: Hainan Schools […]

DBS: Geely Automobile Holdings Ltd – BUY TP HK$34.00

<News Alert>: Nov-21 sequential sales improvement implies momentum is recovering Latest Nov-21 total vehicle sales posted 22% m-o-m expansion, implying supply of critical parts and components is picking up gradually Marginal 11M21 total volume sales growth implies company could miss full-year sales target growth of c.16%, due to supply chain disruption and auto chip shortage […]

DBS: ZhongAn Online P & C Insurance Co Ltd – BUY TP HK$58.00

POA takeaways for Zhong An Insurance (6060 HK, BUY) Salient points in management presentation: Achieved outperforming premium growth. While stringent policy environment limits sector growth in the short term due to policy headwinds, Zhong An managed to still gain market share amid industry consolidation with premium growth stabilizing in Oct after the sector-side slump in Sep. […]

DBS: BYD Company Ltd – BUY TP CNY299

Strong November NEV sales reaffirming our positive view <News alert>: Strong November NEV sales reaffirming our positive view Strong NEV sales growth of 82% y-o-y in Nov-21 despite industry challenges Leading ahead of peers in NEV development with several strong models in the pipeline Comprehensive solutions and capabilities in key components production enable BYD to […]

DBS: CapitaLand Integrated Commercial Trust – BUY TP $2.50

News Analysis: More coming? CICT launched S$200m private placement to fund Australia and future acquisitions at c.4% to 6% discount to yesterday’s VWAP of S$2.0561/unit.  Proposed placement price is a 1.3% to 3.9% discount to the adjusted WVAP of S$2.0076/unit.  Post the placement, pro-form DPU accretion for the Australia acquisition will be reduced to 1.9% […]

DBS: Frasers Hospitality Trust – BUY TP $0.65

Portfolio rejuvenation efforts kick off FHT continues to look attractive from a valuation standpoint at 0.7x P/NAV on pandemic level valuations or -1 S.D from historical trading range Near-term earnings gap expected from the divestment of Sofitel Sydney Wentworth but likely to be filled with capital top-ups in the interim Estimate a 136% y-o-y growth […]

DBS: Far East Hospitality Trust – BUY TP $0.78

Unearthing hidden gold from its portfolio Sale of Central Square at c.58% premium-to-book a pleasant surprise, exceeds our estimates   Exit yield of c.1.8% (FY20 basis), balance sheet gearing to drop to c.33.5%, significant capacity for acquisitions  P/NAV valuations to drop to 0.7x on a forward basis, – 1 standard deviation, an attractive re-entry point  […]

DBS: CDL Hospitality Trusts – BUY TP $1.40

Top beneficiary of domestic staycation boost CDREIT to be a top beneficiary of local staycation demand boost, as those with overseas travel plans hesitate with Omicron variant development We have softer estimates, as we expect the sector to recover to c.70% of normalised levels come 2022 DPU growth of 16% y-o-y and compelling forward FY22 […]

DBS: Ascott Residence Trust – BUY TP $1.30

Maintaining faith in large domestic travel markets Maiden acquisitions within the student accommodation space a testament that ART is en route to grow its longer-stay lodging assets exposure to 15-20%  C.73% exposure in large domestic travel market to be relatively more demand-shielded from everchanging stance on border opening globally Compelling entry at 0.9x P/NAV and […]

DBS: Singapore Hospitality – Recovery delayed, not derailed

More targeted response by countries to curb Omicron spread to delay but not derail travel plans.  Tourist-dependent Singapore hotels unlikely to be impacted significantly given myriad of domestic demand drivers  2022 remains a banner year with a c.40% y-o-y growth in RevPAR driving significant upside to yields Top picks are ART and FEHT for exposure in large domestic markets […]

DBS: Micro-Mechanics Holdings Ltd – BUY TP $4.05

Tiding Through the Semiconductor Cycle •       Semiconductor uptrend intact; revenue to grow at 5-year CAGR of 8% •       Consumable nature of products to support resilient demand throughout the cycle •       Estimated 10% net profit CAGR from FY21-FY23F •       Initiate coverage with BUY with TP of S$4.05, implying potential upside of 28% Initiate with a BUY […]

DBS: China Property and Banking Sector – How far from systematic risk?

Trust loan default is not a big threat to the banking system Only when there is >40% of price decline or >40% default on new mortgage lent since 2019 will trigger meaningful systematic risk Various risk prevention measures have been implemented by government Buy COLI (688 HK) and CG (2007) in property sector and CMB […]

OIR: China Internet – What to make of Delisting Concerns

While the rapid cadence of negative headlines has weighed on sentiment, we offer our thoughts on the above per the following in this flash note: First, we think that the HFCAA rule implementation still gives room for regulators on both sides to enter into negotiations to work out a possible resolution, as we believe that trading […]

CIMB: Malaysia Brewers – Overweight

Traditional on-trade requires liquor licence ■ Recent media reports state coffee shops and restaurants in Malaysia require a liquor licence to sell alcohol products, including beers effective 1 Jan 2022.■ While this news is negative, we estimate that sales contribution from coffee shops nationwide is less than 10-15% of brewers’ total sales.■ In our view, […]

CIMB: Malaysia Agribusiness – Neutral

Palm oil stocks preview for Nov 2021F ■ Malaysia’s palm oil stocks likely fell by 6.2% mom to 1.72m tonnes at end- Nov 2021F due to higher export volumes.■ A survey by CGS-CIMB Futures revealed that Nov 2021 output probably fell 1.3% mom while export volume likely grew 12% mom.■ Speakers at the virtual IPOC […]

China Galaxy: China Telco – Neutral

Remains a key driver of investment ■ On average, shares prices of the telecommunications-related names were up 9.8%, outperforming the HSI’s -14.3% on a YTD basis. Upstream component names underperformed downstream names.■ China had built 1.159m 5G base stations as at the end of 3Q21, and had 623.7m 5G package customers as at the end […]

CIMB: ASEAN Agribusiness – First Resources, KL Kepong, Wilmar

CPO price outlook from virtual IPOC 2021 ■ Speakers at IPOC 2021 were positive on CPO prices for the rest of 2021 but differed regarding when and by how much CPO prices could drop in 1H22F.■ Most bullish views projected CPO to trade at RM5k-5.4k/tonne till Feb 2022 while the bearish camp forecast prices to […]

CIMB: BRC Asia Ltd – ADD TP $2.10 (Previous $1.90)

Brighter outlook for FY22F ■ Riding on construction recovery, BRC Asia reported a strong set of 4QFY21 results. FY9/21 net profit of S$47.0m was 131% higher yoy. ■ With easing border restrictions, we expect more inflow of foreign workers in the coming months, which could aid further recovery in construction output. ■ Reiterate Add, with […]

UOBKH: Digital Core REIT (DCREIT SP) – Initiate Coverage BUY TP US$1.18

Quality Growth From Hyperscale Demand And Sizeable Sponsor Pipeline With 68.5% of its base rental income derived from hyperscalers, DCREIT benefits from strong demand for hyperscale data centres expanding at a CAGR of 23% in 2020-24. Sponsor Digital Realty has granted DCREIT a global ROFR on its pipeline worth over US$15b. Its ability to scale […]

KE: Petronas Gas – An earlier step-down (PTG MK, CP MYR16.30, HOLD, TP MYR17.20, Utilities)

Cukai Makmur’s implementation in FY22 would bring forward PTG’s earnings step-down by a year. Consequently, the incremental impact in FY23 from the likely transportation tariff decline is now less material. Maintain HOLD with an unchanged MYR17.20 TP. On a relative basis, we marginally prefer GMB (GMB MK, HOLD, TP: MYR2.67, TP: MYR2.80) among the gas […]

Malaysia Banking – 3Q21 results round-up | POSITIVE

While aggregate net profit growth is estimated at just 3% in 2022, i) Cukai Makmur is one-off and we expect earnings to rebound 18% in 2023, ii) current valuations largely reflect the tax impact, in our view, and iii) dividend yields are still decent at current prices. POSITIVE maintained on the sector, with BUYs on […]

Beyond Meat (BYND) – Price target decreased to US$76.93

Down from US$82.93, the current price target is an average from 17 analysts. New target price is 19% above last closing price of US$64.61. Stock is down 54% over the past year. The company is forecast to post a net loss per share of US$2.11 next year compared to a net loss per share of […]

KE: Alliance Bank – A niche in the SME segment (ABMB MK, CP MYR2.84, BUY, TP MYR3.25, Financials)

Alliance Bank’s (ABMB) ESG framework could be better defined, but that it is principally a retail bank does reduce overall ESG risks, in our view. We deem the services extended by ABMB to SMEs to be critical, particularly from a Social perspective. We maintain a BUY with a TP of MYR3.25, pegged to a CY22 […]

KE: Malaysia Telcos – 5G coming soon | NEUTRAL

5G services is on course to be made available to consumers in Dec 2021. However, DNB’s wholesale agreements with telcos would likely only be finalized by end-Mar 2022 as negotiations continue. The move to a single wholesale 5G network was already inevitable, thus the delay in negotiations does not materially affect telcos outlook. Our sector […]

QuantumScape – Chief Development Officer recently sold US$403k worth of stock

On the 30th of November, Mohit Singh sold around 14k shares on-market at roughly US$29.21 per share. In the last 3 months, there was an even bigger sale from another insider worth US$16m. Insiders have been net sellers, collectively disposing of US$71m more than they bought in the last 12 months.

CIMB: Alliance Bank Malaysia Berhad – HOLD TP RM2.73

Exiting the stockbroking business ■ AIBB has entered into an agreement with Phillip Futures for the proposed disposal of its stockbroking business; this came as a surprise to us.■ We are neutral on the deal given the minimal one-off disposal gain, and insignificant earnings contributions from its stockbroking business.■ Retain Hold on Alliance as we […]

KE: Velesto Energy Berhad – Improving outlook (VEB MK, CP MYR0.13, BUY, TP MYR0.23, Oil & Gas)

We are optimistic over its next 12 months’ outlook, on stronger operations and financials ahead. Demand for JUs is rising and tenures are lengthening, tell-tale signs of a recovering market. A robust domestic drilling program in 2022, from PETRONAS’ upcoming Activity Outlook, will be a key validating cause. Our TP is pegged to 1x EV/ […]

KE: CapitaLand Int. Comm. Trust – Diversifying Down Under (CICT SP, CP SGD2.06, BUY, TP SGD2.55, REITs)

CICT is recycling part of its divestment proceeds from One George Street in Singapore (at a 3.17% exit NPI yield) into two Australian Grade A office properties for AUD330.7m, from its sponsor at a 5.2% NPI yield, to deliver 3.1% DPU accretion. We see favourable growth fundamentals, as its AUM rises 3% to SGD22.4b, with […]

China Galaxy: China Yuhua Education Corp – ADD TP HK$4.70 (Previous HK$9.80)

Deconsolidation of K–9 schools ■ Excluding the contribution of K–9 schools, Yuhua reported FY8/21 revenue of Rmb2.26bn, up 11.2% yoy, and adjusted net profit of Rmb1.3bn, up 37% yoy, above our expectation, mainly due to better margins.■ We expect FY8/22F top-line growth of 9.1% yoy and net profit growth of 18.6% yoy.■ Yuhua deconsolidated its […]

China Galaxy: China Technology

Apple camp suppliers may face near-term weakness ■ According to a Bloomberg article, Apple told its component suppliers that demand for the iPhone 13 lineup has weakened.■ This is no evidence yet about w eaker iPhone shipments, but as we discussed in our previous industry update, component names in the Apple camp may offer a […]

OIR: Market Pulse

Market Commentary       Tech stocks sold off on Wall Street after US jobs report ·           Investors retreated from US stocks on Friday, dumping shares in large technology companies and sending the Nasdaq Composite index sharply lower, as a mixed US jobs report was seen as paving the way for […]

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