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CGS CIMB |
UOB KAYHIAN |
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SATS Ltd Tempered volume growth assumptions
■ We think SATS could see earnings growth stall in FY3/26F as the global aviation industry faces uncertainty from the souring macroeconomic outlook. ■ We expect global air cargo demand to decline 10% yoy in CY25F with the reciprocal tariffs and tit-for-tat retaliation between US and its trade partners. ■ The potential economic fallout could also lead to softer global air travel demand, affecting SATS’s ground-handling and aviation catering businesses. ■ We believe its current share price at 8-year trough EV/EBITDA prices in its dented growth prospects. Maintain Add; DCF-based TP now S$3.05.
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STRATEGY – SINGAPORE Small/Mid Caps
Retail Investors’ Webinar Highlights We highlight key discussion points from our monthly webinar on small/mid cap trends for retail investors earlier this week. The recent tariff developments have sparked investor concerns over stock impact, whether to hold cash or buy the dip, and more. In this note, we share our take on the recent market sell-off and explore value in three small/mid cap stocks, namely PropNex, China Sunsine and Oiltek.
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UOB KAYHIAN |
UOB KAYHIAN |
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SECTOR UPDATE Banking – China
Playing Safe Amid Tariff Fears Trump’s unprecedented reciprocal tariffs triggered a massive sell-off in the Hong Kong market. On 30 Mar 25, China’s four SOE banks also announced their capital-raising plans, with the dilution impact largely in line with our expectations. We believe the potential risks from Trump's tariffs are manageable for Chinese banks. Hence, investors may shift back to defensive, high dividend yield names like Chinese banks amid the sentiment hit from the tariff shocks. Upgrade to OVERWEIGHT. Top pick: CCB.
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SECTOR UPDATE Gloves – Malaysia
A Kaleidoscope Of Perceptions Underneath the facade of geopolitical reshuffling and the US’ reciprocal tariffs, the Malaysian glove sector faces mixed investor sentiments as uncertainty builds up. Nevertheless, the sector’s core fundamentals remain solid as we anticipate sequential earnings growth driven by a full recapturing of US market share. More importantly, ytd retracement and bargain forward valuations are offering an attractive risk-reward balance. Maintain OVERWEIGHT.
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| MAYBANK KIM ENG | MAYBANK KIM ENG |
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ComfortDelGro (CD SP) A shelter from the tariff storm
New street-hail operator licence; mainain BUY Singapore’s transport regulator LTA recently awarded a street-hail service operator licence to GrabCab (valid for 10 years effective 9 Apr), bringing the total number of taxi operators to 6 in Singapore. While we expect sector competition to increase, the actual impact might be somewhat muted as street hailing volumes have been on a secular decline and account for only 10-11% of total P2P trips. No change to our FY25-27 forecasts as we believe our estimates are still conservative versus the Street. Backed by a compelling 6% yield, we retain BUY with a TP of SGD1.64. CD has also resumed its share buyback yesterday through acquiring 115,200 shares at SGD1.37 in the open market.
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Singapore Banks In to the storm
NPLs, earnings, capital returns at risk. D/G NEUTRAL It is clear tariffs are not just a negotiating tactic, but the central doctrine of the Trump Administration. As a result risks have increased from weaker global growth and disruptions to North-South supply chain relocations. These could significantly increase asset quality risks for the banks. Operational downgrades are likely, as credit demand and margins shrink. Capital returns may also slow as balance sheets are preserved. Nevertheless, the sector’s strong liquidity, capital levels and provisioning makes it much better prepared than past down-cycles and this is a competitive advantage. With limited catalysts, D/G DBS, UOB to HOLD. Together with HOLD on OCBC, D/G sector outlook to NEUTRAL.
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