* SCG Packaging – BUY (Announces a greenfield project)

SCGP has announced the investment of a greenfield 370ktpa packaging paper plant in north Vietnam, with total investment cost of Bt11.7bn. Commercial operations are expected in 2024, adding around Bt10bn/Bt2.1bn in revenue and Ebitda. We upgrade this stock from O-PF to BUY on price action, maintain target price at Bt76.5/share based on DCF valuation (WACC 6.7%).


* Singapore – IF21 Singapore takeaways – Tackling the growth conundrum

18 Singapore companies presented at IF21, with most optimistic about 2H21 and 2022, but there were undertones of growth concern for most too, as the path to recovery is also predicated by the course of the pandemic and borders opening. From a bottom-up basis we believe banks, DBS and UOB, internet firm, SEA, developer, City Dev, border reopening play, SATS, tech firm, Venture, and Yangzijiang Shipbuilding, appear to have the clearest growth paths over the next 6-12 months.



* Astro Malaysia Holdings Bhd (ASTR.KL) Weighed by weak consumer sentiment

2Q FY22 profit of RM101 mn was -16% YoY and -31% QoQ, weighed by weak consumer sentiment and higher content costs (UEFA Euro 2020 and Tokyo Olympics). 1H profit of RM248 mn made up 45% of street full-year estimates (43% of ours). In-house streaming service sooka became the top entertainment app on Google Play within the first two weeks of launch, and has accumulated 525k users to-date. Though still early days, this could potentially bring back the cord-cutting customers to Astro’s ecosystem.


Subscription and adex revenues, however, were impacted by the lockdown and weak economic conditions. We subsequently lower our FY22-24E EPS by 7-16%, reducing our TP to RM1.20 (from RM1.40).

While content costs are expected to moderate in the coming quarters, prevailing uncertain conditions will likely limit stock upside. We, however, note that yields appear attractive at 7.3% (FY22E). Astro has declared 3.0 sen DPS YTD (vs 1H21: 2.5 sen).



* Analyst Yuichiro Isayama has updated his views on the Japan Machinery industry cycle as part of a very comprehensive 39-page report: 1) he sees the order cycle peaking out in FY3/22 due to front-loading, but expects it to reach new heights after a short dip in FY3/23; 2) he believes growth prospects will look even stronger from FY3/24, buoyed by rapidly evolving demand, increasing consideration of environmental issues and a favourable business backdrop assuming a post-COVID new normal. Finally, 3) he expects share price valuations to reflect this growth potential. He has upgraded Misumi Group to Buy from Neutral and added Daifuku to the Japan Conviction List. His investment strategy heading toward end-2021 is to place greater emphasis on long-term growth stocks (defined as environmentally friendly “enablers” in the report) rather than focusing on mean reversion in near-term valuation gaps. He sees divergence in growth opportunities in the sector.



* Comfortdelgro : Limited near-term implication from National Express’ potential bid for Stagecoach

We see limited near-term implication on CD’s UK business segment (22% of revenue, 10% of 2019’s operating profit) from National Express’ potential bid for Stagecoach. NEX’s no presence in the London bus market and only 7% market share in Regional UK bus market (SGC has 26%) will have limited overlap on the network yet there is mid-term synergy potential from depot & equipment sharing. London bus contracts contributed c70% of CD’s UK revenue pre-Covid per our estimate. Maintain Buy on CD with S$1.88 TP on expected mobility recovery in its key Singapore market with upside from Australian operations’ value unlocking.