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UOB KAYHIAN |
UOB KAYHIAN |
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SATS (SATS SP) Tariff War Posing Significant Uncertainties To Global Trade
The escalating tariff war poses significant uncertainties for the global trade outlook in the medium term. SATS, due to its significant 50%/25% revenue exposure to the global/US air cargo handling business, is poised to be negatively impacted by a potential setback in globalisation and decline in global trade volume. We tentatively cut our FY26-27 air cargo volume projections for SATS by 5%, and lower our earnings projections by 17-18%. Downgrade SATS to HOLD. Target price: S$2.89.
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SECTOR UPDATE Internet – China
Navigating Headwinds And Uncovering Opportunities Upon Tariff Pressures Chinese internet companies’ share prices have dropped 10-30% mtd following the implementation of incremental tariffs from the US. Chinese internet companies have limited business exposure to the US except for PDD’s Temu. However, the 34% tariffs announced by China on all US imports could have potential implications for China mega-caps’ AI capex in relation to US chip imports. We prefer domestic-focused plays which stand to benefit from domestic policy stimuli, with Southbound inflow to be a key driver. Maintain MARKET WEIGHT.
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UOB KAYHIAN |
MAYBANK KIM ENG |
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Public Bank (PBK MK) Multiple Catalysts On The Horizon?
With the strongest provision buffers in the sector, the stock is best positioned to weather global geopolitical risks, in our opinion. We also highlight three potential catalysts for relative outperformance, which should support share price resilience. That said, we trim our target price to RM5.00 (1.64x 2025F P/B, 12.5% ROE) from RM5.35, reflecting a lower long-term growth rate to account for geopolitical impacts on overall growth. Foreign shareholding (end-Feb 24) of 26.4% is near its 15-year low of 25.2%.
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Dialog Group (DLG MK) OPEC+’s recent move may strengthen demand for storage
Maintain BUY @ SOP-TP of MYR2.34 We maintain our BUY recommendation, earnings forecasts and SOP-based TP of MYR2.34 on Dialog. We believe recent weakness in Dialog’s share presents a buying opportunity as it currently trades at a c.12x FY26E earnings (-3SD over 5Y mean). Also, we like Dialog for its cash flow stability from its midstream tank terminal assets amid low oil prices. New tank terminal contracts generating recurring income could re-rate the stock.
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| LIM & TAN | LIM & TAN |
At S$1.10, Centurion is capitalized at S$925mln and trades at 8.7x forward P/E and 0.80x P/B with a dividend yield of 3.2%. The expected increase in dormitory capacity over the next few years is not new, given the government’s efforts to increase total capacity before the dorm transition period between 2027-2030 which will then likely lead to a reduction in beds. Centurion is set to transit towards an asset-light model and divesting or spinning-off some of these assets at decent valuations could be a way to unlock value for shareholders. Further re-rating catalysts could come from the spin-off and distribution of their portfolio in a REIT platform on SGX-ST in 2H’2025. We have an “Accumulate on Weakness” recommendation on Centurion.
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YZJ Shipbuilding’s market cap stands at S$7.5bln and currently trades at 5-6x forward PE and 1.5x PB, with a dividend yield of 6.3%. Consensus target price stands at S$3.30, representing 73% upside from current share price. YZJ SB’s share price has experienced a significant decline of approximately 42%, dropping from $3.30, largely due to concerns over potential port charges imposed on Chinese vessels in the U.S. Despite this, we believe the stock is currently oversold as the ship-yard continues to be fully utilized and YZJ SB is backed by a robust net cash position of 50%, a strong order book, and superior operating metrics. However, given the current geopolitical volatility, particularly the ongoing uncertainty surrounding President Trump’s policies, we anticipate that YZJ SB’s share price could continue to experience fluctuations. While we recommend an “Accumulate on Weakness” rating based on the strength of its fundamentals, investors should be aware of the potential for continued volatility as the geopolitical landscape unfolds. Management has restarted their share buy back program, having bought about 6mln shares in the open market around current prices. |
