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Technology - Handsets AI-driven multi-device upgrade cycle is here
■ We think AI-driven premiumisation trends should lift demand for sophisticated handset components, pushing up profits in the China smartphone sector.
■ The next phase of growth should come from auto parts/AI-enabled devices on components makers’ edge in optics, acoustics and precision manufacturing.
■ Since Oct 25, the sector has underperformed due to rotation and fears that rising memory costs will hurt margins, which presents a buying opportunity.
■ Overweight on China smartphone sector. Top picks: Xiaomi and Lens Tech.
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Greater China
Strategy Alpha Picks: December Conviction Calls
Highlights
• In November, market consolidation continued but with a slowdown in declines, with the HSI and MSCI China Index falling 0.2% mom and 2.4% mom respectively. By late-November, investor sentiment had improved partially as odds of a 25bp Fed rate cut rose to nearly 90%.
• However, it is believed that the market will not bottom out until mid-December. We stay cautious and prefer defensives and oversold names with near-term catalysts.
• We add BeOne Medicines, HKEX, NetEase, Plover Bay to our BUY list. We take profit on AIA and cut losses on Jacobson, JBM Healthcare and PICC P&C
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Marco Polo Marine (MPM SP) FY25: Strong Finish; Positive Outlook For FY26
Highlights
• MPM’s FY25 core earnings of S$25m (-4% yoy) were in line with expectations. Earnings jumped 170% yoy to S$59m on one-off gains.
• We see a positive outlook for FY26 on both ship chartering and shipyard, driven by its ship chartering orderbook and S$198m ORV win.
• Higher dividend signals confidence. We upgrade our FY26-27 earnings forecasts and maintain BUY with a 36% higher target price of S$0.188.
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DFI Retail Group Higher margins and payouts ahead ■ DFI held its inaugural Investor Day on 3 Dec 25, during which it unveiled FY28F operating margin targets that were ahead of our expectations.
■ We raise our FY26F-27F EPS estimates by 6-10% as we turn more positive on margin expansion. This translates to higher TP of US$4.50 (18x fwd P/E).
■ DFI raised its dividend payout ratio to 70% from 60% previously (implied FY27F yield of 5%), with potential upside if M&A plans do not materialise.Read more...
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CITY DEVELOPMENTS
CDL’s market cap stands at S$6.5bln and currently trades at 19.9x forward PE and 0.7x PB, with a dividend yield of 1.1%. Consensus target price stands at S$8.12, representing 11.1% upside from current share price. Given that share price has done well recently, we maintain a HOLD on CDL.
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