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AEM Holdings Ltd (ADD, tp:SGD5.84) – NDR highlights – 12/11

We hosted AEM Holdings for a virtual non-deal roadshow (NDR) today to discuss its 3Q21 business update. Management remains optimistic of its FY22F prospects and continues to work hard to win new customers. Reiterate Add, with an unchanged TP of S$5.84.

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China Sunsine Chemical Holdings (ADD, tp:SGD0.78 ) – ASP uptrend points to a stronger 4Q21F – 12/11

3Q21 net profit of Rmb100m (-29% qoq, +47% yoy) was above expectations on stronger than expected sales volume. Rubber accelerator prices have seen a strong uptick over the past three months. This should bode well for Sunsine’s profit spread in 4Q21F. Valuation is attractive at 2.5x FY22F P/E (ex-cash). We reiterate our Add rating with a slightly higher TP of S$0.78.

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Dairy Farm Int’l (HOLD, tp:USD3.50 ) – Light at the end of the tunnel? – 13/11

DFI reported a weak set of business updates with profits continuing to be impacted by the ongoing pandemic and losses by key associate Yonghui. We expect the tough operating environment to persist in 4Q21F, but see light at the end of the tunnel with potential HK-China border reopening in 1H22F. We believe more visibility on the HK-China border reopening is needed for sustained multiples re-rating. Maintain Hold with a lower TP of US$3.50.

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Frencken Group Ltd (HOLD , tp:SGD2.44 ) – Taking a breather – 12/11

3Q21 net profit was slightly below expectation at 23% of our/consensus full-year forecasts. We note the margin pressure in 3Q21 performance with net profit margin falling to 7.5% vs. 8.6% in 2Q21. As we roll over our valuation, our TP dips to S$2.44; downgrade to Hold. We recommend switching to AEM (AEM SP, ADD: TP: S$5.84; CP: S$4.38).

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Golden Agri-Resources (HOLD, tp:SGD0.281 ) – 9M21 results above due to strong CPO price – 12/11

GGR’s 9M21 core net profit was above our expectations due to better-than-expected CPO price and lower costs of production. 9M21 EBITDA grew 2.6x as upstream benefitted from increased FFB output and higher CPO selling prices. Reiterate Hold rating with a higher TP of S$0.28. Share price supported by strong 4Q earnings and proposed listing of Gemini.

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ISDN Holdings Ltd (ADD, tp:SGD1.00 ) – Re-rating catalyst: hydropower earnings – 13/11

3Q21 net profit was above expectations at 35% of our full-year forecast. Potential hydropower earnings contribution in FY22F could re-rate the shares. Guidance from management could help improve valuation. Reiterate Add with a higher TP of S$1.00 on rollover.

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SATS Ltd (HOLD, tp:SGD4.32 ) – ROE to return to 13-15% by 2025 – 13/11

We think SATS’s 3-year revenue target of S$3bn by FY25F is achievable, assuming a 100% pre-Covid travel recovery and successful MA strategy. SATS has reset its S$1bn investment/capex target over 3 years, a plan that was shared in its previous 2019 capital market day, but stalled by Covid-19. Management is also cautiously optimistic that ROE could return to 13-15% by FY25F (FY16-19: c.15.4%) with potential lower margin trend in the near-term. Execution and recovery are key. Maintain Hold and lower TP to S$4.32. SATS trades at 37x FY23F P/E, above its pre-Covid-19 c.26x in 2018.

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Sembcorp Industries (ADD, tp:SGD2.51) – Reaching c.40% of 10GW target – 12/11

SCI to acquire 98% interest in a 658MW portfolio of wind and solar assets in China worth $700m. We estimate EBITDA contribution of S$60m-70m p.a. This brings total gross renewable energy capacity to 4.2 GW (wind 2.84GW, solar 1.20GW, battery storage 0.12GW), including WIP assets. Acquisition to be completed in 1H22F; management saidfavourable valuation and ROE for SCI (albeit no numbers disclosed). Add with TP of S$2.51.

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Silverlake Axis Ltd (ADD, tp:SGD0.37) – The tide is shifting – 13/11

1QFY6/22 core net profit of RM35.2m (+7% yoy) was below expectations mainly due to softer project-related revenue from a delayed contract signing. Order wins rose to RM123m in 1QFY6/22 – topping the past 4 quarters (FY21: RM326m). Potential deal pipeline stayed robust at RM1.3bn. Reiterate Add. We look past the softer 1Q and forward towards sequential earnings growth as SILV’s stronger order win momentum gets recognised.

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Singapore Airlines (HOLD, tp:SGD5.81 ) – Prospects brighten with VTL schemes – 12/11

2QFY3/22 core net loss of S$399m was in-line but we widen our FY22F loss forecast on slower-than-expected capacity restoration and higher fuel costs. Reiterate Hold as the stock has reflected most of the upside from borders reopening, in our view, and we now turn our attention to downside risks. Our TP is raised slightly to S$5.81, rolling forward to end-FY23F, still based on P/BV of 1.06x, 1 s.d. above mean, against our adjusted BVPS.