Phillip Securities Research Morning Call...2020/08/24 · Portfolio valuation fell by 4.6% in RMB terms 13.8% of leases by GRI expiring in FY20 to be renewed Dasin Retail Trust ACCUMULATE

Phillip Securities Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2020. All Rights Reserved. For internal circulation only.

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Phillip Securities Research Morning Call24th August 2020

Hyphens Pharma

Dasin Retail Trust

City Developments

Yoma Strategic

JEP Holdings

Thai Beverage

SingTel

Stock Counter Updates

SG Banking Monthly

SG REITS Monthly

SG Bonds Weekly

SG Weekly

Macro/Sector Outlook



Tay Wee Kuang

Research Analyst

Phillip Securities Research Pte Ltd

24th August 2020

Hyphens Pharma International LtdShaking off COVID-19 woes with expanded portfolio



SGD '000 1H20 1H19 YoY Comments

Specialty pharma principals 31,408 29,470 7% Steady growth was achieved across both 1Q20

and 2Q20 (+11% YoY and +3% YoY) despite slower

business momentum in 2Q20.

Proprietary brands 9,167 7,064 30% Strong demand for products under Ceradan® and

Ocean Health® brand portfolio which benefited

from moving to online sales channels.

Medical hypermart and digital 21,065 19,472 8% Stellar 1Q20 sales (+17% YoY) within segment

weighed down in 2Q20 when Singapore entered

Circuit Breaker period. Revenue for the segment

fell 0.7% YoY in 2Q20.

Revenue 61,640 56,006 10%

Cost of sales (40,535) (36,382) 11%

Gross profit 21,105 19,624 8%

Distribution costs (12,373) (11,067) 12%

Administrative expenses (4,716) (4,850) (3%)

Finance costs (51) (74) (31%)

Other income and gains/(losses) 1,184 82 n.m. Recognised S$900k of Job Support Scheme (JSS)

from government grant in 2Q20.

Profit/(loss) before tax 5,149 3,715 39%

Income tax expense (867) (651) 33%

Profit, net of tax 4,282 3,064 40%Source: Company, PSR

+ The Positives

Proprietary brands revenue benefited (+24% YoY) from online sales channel during Circuit Breaker period in the second quarter

Move to online sales channel benefited brands Ceradan® and Ocean Health®

Underlying revenue growth intact despite slower second quarter

Other segments saw modest growth in 1H20

COVID-19 slowed sales in 2Q20

- The Negatives

Inventory stock-up in anticipation of product license renewals weigh on cash flows

Product license renewals in Vietnam might see supply shortage

2Q20 cash outflow of S$1.7mn due to higher inventory levels (+S$4.7mn) in the quarter

Hyphens Pharma International LimitedACCUMULATE (Maintained), TP: S$0.495 (prev S$0.435), Last: S$0.470



SGD '000 1H20 1H19 YoY Comments

Specialty pharma principals 31,408 29,470 7% Steady growth was achieved across both 1Q20

and 2Q20 (+11% YoY and +3% YoY) despite slower

business momentum in 2Q20.

Proprietary brands 9,167 7,064 30% Strong demand for products under Ceradan® and

Ocean Health® brand portfolio which benefited

from moving to online sales channels.

Medical hypermart and digital 21,065 19,472 8% Stellar 1Q20 sales (+17% YoY) within segment

weighed down in 2Q20 when Singapore entered

Circuit Breaker period. Revenue for the segment

fell 0.7% YoY in 2Q20.

Revenue 61,640 56,006 10%

Cost of sales (40,535) (36,382) 11%

Gross profit 21,105 19,624 8%

Distribution costs (12,373) (11,067) 12%

Administrative expenses (4,716) (4,850) (3%)

Finance costs (51) (74) (31%)

Other income and gains/(losses) 1,184 82 n.m. Recognised S$900k of Job Support Scheme (JSS)

from government grant in 2Q20.

Profit/(loss) before tax 5,149 3,715 39%

Income tax expense (867) (651) 33%

Profit, net of tax 4,282 3,064 40%Source: Company, PSR

Outlook

Active expansion of product portfolio continues to provide growth catalysts

Acquisition of hair growth product brand CG210® strengthen proprietary brands portfolio

New product launches from existing brand portfolios Ceradan® and Ocean Health®

Ocean Health® enters Hong Kong market with partnership deal with lifestyle brand SUTL

Break into US$722mn vitamins and dietary supplements market in Hong Kong

Provide Hyphens with established retail sales channel in a competitive market

Investment Action

We maintain our ACCUMULATE recommendation with revised TP of S$0.495 (prev S$0.435). FY20e adjusted upwards by 25% to reflect strong income growth and recognition of Job Support Scheme. Terminal growth rate was adjusted from 1.5% to 2.0% to reflect opportunities for growth in fragmented market.

Hyphens Pharma International LimitedACCUMULATE (Maintained), TP: S$0.495 (prev. S$0.435), Last: S$0.470



Banking MonthlyFirst steps to recovery

Tay Wee Kuang

Research Analyst


24th August 2020



NIM in 2Q20 experienced full brunt of March interest rate cuts

Double-digit declines across banks in 2Q20

Quarterly average of 1.57% is 10 bps lower than 2013

despite similar levels of interest rates

Exacerbated by deposits inflow and lagged repricing of

deposits

Expected to recover slightly in subsequent quarters

Interest rates stabilises in August

Current 3M-SIBOR and 3M-SOR (0.41% and 0.21%

respectively) comparable to quarterly lows observed in 2013

(0.37% and 0.21% respectively)

Banking Industry – Maintain Neutral

NIM (%) DBS OCBC UOB

2Q20 1.62(-29 bps)

1.60(-19 bps)

1.48(-33 bps)

1Q20 1.86 1.76 1.71

2Q19 1.91 1.79 1.81




Loans growth turns negative in June

Business loans weakness (+0.55% YoY):

Weighed down by general commerce (-6.2% YoY),

financial institutions (-2.5% YoY) and professional &

private individuals (-9.6%)

Consumer loans continues to contract (-3.44%):

Weakness across the board

Credit card loans show signs of recovery (+2.9%

MoM)

Loans growth (%) Business Consumer Total

Jun-20 0.55 -3.44 -0.98

May-20 3.02 -3.48 0.51

Apr-20 5.36 -3.28 1.98




Reserves build-up well underway

DBS OCBC UOB

380,847 267,874 280,693

80 - 130 100 - 130 100 - 120

3,000 - 5,000 2,700 - 3,500 2,800 - 3,400

RLAR reserves 404 876 114

ECL stage 1 & 2 (GP) 2,511 1,048 1,985

ECL stage 3 (SP) 2,502 1,397 1,626

Total reserves 5,417 3,321 3,725

RLAR reserves - 874 379

ECL stage 1 & 2 (GP) 3,799 1,668 2,391

(+ 884) (+ 618) (+ 671)

ECL stage 3 (SP) 2,922 1,842 1,664

6,721 4,384 4,434

(+ 1,304) (+ 1,063) (+ 709)

Compared to guidance 25 - 45% 30 - 40% 20 - 25%

Gross loan book (S$mn)

Credit cost guidance (bps)

Expected allowances (S$mn)

FY19

(pre-COVID-19)

Current

Total reserves

0

0




Banks’ dividend yield capped by new dividend guideline from MAS



Derivatives improved in July while SDAV maintains double-digit growth YoY

Both SDAV and DDAV show double-digit growth YoY in July

SDAV up by 15% YoY while DDAV was up 27% YoY

Debut of FTSE Taiwan Index Futures saw 80,000 contracts transacted in less than 10 trading days in

July

Muted impact expected from MSCI cessation

FTSE replacement should see faster adoption rate than other new product launches

Investment action

Maintain Singapore Banking sector at Neutral. Cap in dividend reduce yield attractiveness but banks are

expected to have hit the lows as Singapore exits Circuit Breaker to benefit non-interest income.




Dasin Retail TrustRecovery to lend support to leasing

Natalie Ong

Research Analyst


24th August 2020



+ The Positives

June 2020 turnover rent recovered to 90.4% of 4Q19 average

Portfolio occupancy inched by 0.2ppts QoQ to 97.0% (4Q19: 98.8%)

NPI margin improved to 81.6% in 1H20, from 80.7% in 1H19

Dasin Retail TrustACCUMULATE (Maintained), TP: $0.91, Last: $0.82SGD mn 1H20 1H19 YoY Comments

Gross revenue 37.1 35.2 5.2% Higher due to acquisition of Doumen Metro Mall

(acquired 12 Sep 2019) which contributed $8.6mn,

partially offset by rental rebates provided to

tenants

Net Property Income 30.3 28.5 6.4%

Net Income 0.7 11.9 NM Mainly due to higher unrealised foreign exchange

loss of $9.1mn in 1H20 (1H19: +S$1.1mn) due to

weakening of SGD against USD and HKD on USD and

HKD denominated loans.

Amount avail. for dist. 8.8 10.7 -17.1%

DPU (Cents)* 1.92 3.40 -43.5% Due to lower earnings and englarged share base

from preferential offering and fewer units with

distribution waiver

* with distribution waiver



- The Negatives

Portfolio valuation fell by 4.6% in RMB terms

13.8% of leases by GRI expiring in FY20 to be renewed

Dasin Retail TrustACCUMULATE (Maintained), TP: $0.91, Last: $0.82

Outlook

Positioned to benefit of transformation of the Great Bay Area

ROFR pipeline of 18 properties spanning four cities –six of which are still under construction

Maintain BUY with an unchanged TP of S$0.91



City Development LimitedShoring up recurring income

Natalie Ong

Research Analyst


24th August 2020



+ The Positives

Respectable 356 units sold in SG in 1H20 (-29.5%, 1H19: 505 units), despite 10 weeksof showroom closures

Unlocking additional GFA throughredevelopment of Fuji Xerox and CentralMall

- The Negatives

Hospitality segment hardest high with lossesexpected to continue

City Development LimitedBUY (Maintained), TP: $10.68, Last: $7.97

Outlook

Streamlining of M&C and Sincere operations, divestment of non-core hotel and China retail assets

Maintain BUY with a lower TP of S$10.68

Results at a glance

(SGD mn) 1H20 1H19 YoY Comments

Gross revenue 1,072.9 1,596.5 -32.8% Hotel operations accounted for 82% of the decline

Gross profit 446.5 771.4 -42.1%

Operating profit 61.7 423.6 -85.4%

PBT comprising: 13.8 490.3 -97.2% Lower divestment gains (1H20: $49.9mn, 1H19:

$197.2mn)

- Property Devt 115.0 179.6 -36.0% Due to timing of income recognition and lower sales

value from few units sold from mass market projects

in 1H20 vs ultra-luxury projects in 1H19

- Hotel Ops (208.2) 29.5 n.m. 28% of 152 hotels closed, RevPAR -56.6%

- Investment Ppty 26.3 258.4 -89.8% Largely due to rental rebates provided and lower

divestment gains (1H20: $26.4mn, 1H19 $153.9mn)

- Others 80.7 22.7 254.8% Higher due to divestment gain on technology

investment and higher interest income from property

financing business

PATMI 3.1 362.0 -99.1%

Source: Company, PSR



Singapore REITs SectorCalmer waters

Natalie Ong

Research Analyst


24th August 2020



FTSE REIT Index outperforming STI

FSTREI VS. STI

Source: Bloomberg, PSR

580

680

780

880

980

Aug-19 Nov-19 Feb-20 May-20 Aug-20FSTREI IndexSTI (rebased)FSTREH Index (rebased)

INDEX RETURN (%)

1MTH 3MTH YTD 1YR

FSTREI RETURN 0.2 8.9 (7.1) (4.2)

FSTREH RETURN (3.2) 1.4 (23.3) (18.6)

STI RETURN (3.0) 1.1 (18.9) (15.6)



S-REIT yield spread at the +0.3 s.d. level

FTSE Straits Times REIT Index Yield Spread over 10YSGS

Source: Bloomberg, PSR

Dividend yield: 4.6%

2019 Ave: 4.6%

Div. yield spread: 3.7%

2019 Ave: 2.6%

FED rate: 0% - 0.25%,

after150bps cut

3M SOR: 0.21%

10YSGS: 0.89%



Recovery by subsector

Healthcare Hospitality Retail Commercial Industrial Diversified

Change YTD -2.0% -40.0% -24.3% -23.3% 10.3% -25.0%



Implications for S-REITs

Slower leasing activity, mostly renewals

Higher vacancy rates

Lower rents and/or negative rental

reversions

Markets are “frozen”, buyer-seller price

expectations widening

Structural shift in future demand for real

estate

Outlook Mitigants

Tenants are locked in by existing leases

Relatively low supply coming online across

the subsectors

Construction slippage will provide near-term

support

Supply will adjust to help the real estate

sector achieve a healthy equilibrium



Office – Rents and prices dipped, weighed down by central

Industry Central FringeOccupancy

(%)

168.7 172.2 142.8 87.9

0.0% -2.3% 1.1% -1.1 ppts

-4.6% -5.1% -4.6% -0.6 ppts

Office Rental Index

Rebased 4Q1998 = 100

2Q20

QoQ

YoY

Industry Central Fringe

126.9 129.9 119.2

-4.3% -4.3% 5.1%

-12.1% -11.9% 1.1%YoY

Office Price Index


2Q20

QoQ



Office – Muted supply to provide near-term support

CBD Incentive Scheme (Redevelopment 2021/22)

AXA Tower (700K sq ft)

Fuji Xerox Tower (354K sq ft)

Central Mall (131K sq ft)



Office – Continued relevance of office workspace

Resilience of office-using tenants

Muted supply coming online

Office synonymous with mentoring, collaboration,

innovation and corporate culture

Potential positives:

Lower desk-density and split office may increase

demand

Demand for flex-space

Potential negatives:

Risk of rightsizing due to adoption of telecommuting

Hub-and-spoke occupier strategy



Retail – Lifted by Phase 2 of reopening


(%)

95.2 93.6 96.1 90.4

-3.5% 0.1% -4.9% -1.6 ppts

-1.3% -2.1% -0.9% -1.9 ppts

2Q20

QoQ

Retail Rental Index


YoY

Central Central Fringe

108.8 93.8 117.1

-1.5% -0.6% -4.3%

-1.8% -2.0% -4.5%

Retail Price Index


YoY

2Q20

QoQ



Retail – Inconsequential supply as part of integrated projets


(%)

95.2 93.6 96.1 90.4

-3.5% 0.1% -4.9% -1.6 ppts

-1.3% -2.1% -0.9% -1.9 ppts

2Q20

QoQ

Retail Rental Index


YoY



Retail – Recovery in Phase 2

SG Retail Sales YoY % (excl. Motor Vehicle Sales)

RSI

(excl. motor

vehicles)

RSI

(Dept stores)

RSI

(Supermarkets)

RSI

(Fashion)

F&B Index

Jun-20 -23.3 -67.7 46.3 -63.1 -42.7

Jun-19 -0.4 0.3 0.5 7.6 4.6

95% of tenants operating

F&B dine in recovering well, postponement not

cancellation of spending

Capacity constraints but offset by more balanced

customer-flow throughout the day

Flexible leasing strategies:

shorter lease term,

higher risk-sharing

Digitalisation to future-proof operations

Ecosystem for tenant and customer stickiness

Leads for new business



Retail – Recovery in Phase 2

SG Retail Sales YoY % (excl. Motor Vehicle Sales)

RSI

(excl. motor

vehicles)

RSI

(Dept stores)

RSI

(Supermarkets)

RSI

(Fashion)

F&B Index

Jun-20 -23.3 -67.7 46.3 -63.1 -42.7

Jun-19 -0.4 0.3 0.5 7.6 4.6



Hospitality – Lingering fears will impede recovery

Fast lane arrangements for essential travel

General travel to Brunei and NZ from 1 Sept

Hotels can apply to reopen for staycation booking

from 3 July 2020

$320mn SingapoRediscovers Vouchers to boost

domestic tourism

Luxury/upscale and resort-styled hotels to benefit

from staycation demand

Significant discounts will supress RevPARs

Recovery hinges on vaccine timeline

Source: CEIC, PSR

Visitor Arrivals Hotel RevPAR

(S$)

Hotel Occupancy

(%)

Hotel Average

Room Rate (S$)

Jun-20 2,170 37 54.3 68

Jun-19 1,551,781 181 86.1 211

YoY% -99.86% -79.57% -67.61%

RevPAR per

room/nightAverage Luxury Upscale Mid-tier Economy

Jun-20 37 47 47 35 30

Jun-19 181 371 215 145 91

YoY% -79.57% -87.36% -77.97% -75.64% -66.49%



Industrial – Resilient, for now

Industrial Rental Index

Rebased 4Q2012 = 100Industry Occupancy

2Q20 90.3 89.4

QoQ (%) -0.7% 0.2 ppts

YoY (%) -0.8% 0.1 ppts




Industry Biz Park Factory Warehouse

89.4 85.2 89.7 88.3

0.2 ppts -0.8 ppts 0.1 ppts 0.9 ppts

0.1 ppts -0.8 ppts 0.2 ppts -0.4 ppts

QoQ (%)

YoY (%)

Industrial Occupancy (%)

2Q20




Breakdown of Industrial Supply




Low reliance on premise to generate revenue for

business parks

High reliance on premise to generate revenue for

light industrial, hi-spec, factories, warehouse,

data centres

High percentage of tenants operating in premise

during circuit breaker

Potential positives:

Heightened demand for logistic and data

centre assets

Higher stock piling levels



Phillip Securities’ Stock Calls

1 Covered by PSR under a paid research agreement2 Covered by PSR under the ‘Research Talent Development Grant Scheme’ administered by SGX

3M Daily

Average

Volume

Share

Price S$

P/NA

V (x)PSR Rating

Target Price

S$

FY20e DPU

cents

FY21e DPU

cents

FY20e DPU

Yield

FY21e DPU

Yield

Total

return

Ascott Residence Trust 8.7 0.87 0.69 BUY 1.08 5.37 6.99 6.2% 8.0% 30.3%

CapitaLand Mall Trust 18.2 1.85 0.92 BUY 2.33 10.78 12.81 5.8% 6.9% 31.8%

Frasers Centrepoint Trust 2.8 2.38 1.08 ACCUMULATE 2.61 9.88 13.56 4.2% 5.7% 13.8%

Dasin Retail Trust1 0.6 0.82 0.60 ACCUMULATE 0.91 5.00 5.62 6.1% 6.9% 17.8%

CapitaLand Commercial Trust 13.4 1.59 0.89 ACCUMULATE 1.91 7.67 9.12 4.8% 5.7% 24.9%

Manulife US REIT 3.8 0.75 0.93 BUY 0.90 6.39 6.49 8.6% 8.7% 29.4%

Prime US REIT2 1.0 0.79 0.89 BUY 0.94 7.04 7.32 8.9% 9.3% 27.9%

IREIT Global Trust2 0.5 0.70 0.77 NEUTRAL 0.68 4.92 4.57 7.1% 6.6% 4.9%

Ascendas REIT 12.9 3.40 1.57 ACCUMULATE 3.63 16.72 16.9 4.9% 5.0% 11.7%

Keppel DC REIT 5.7 2.96 2.59 NEUTRAL 2.57 8.99 9.55 3.0% 3.2% -10.1%

Note: 3M Daily Average Volume

is calculated based on the total Source: Bloomberg, PSR, updated 23 August 20201 Covered by PSR under a paid research agreement

2 Covered by PSR under the ‘Research Talent Development Grant Scheme’ administered by SGX



Yoma Strategic HoldingsTopline positive amidst COVID-19

Tan Jie Hui

Research Analyst


24th August 2020



+ The Positives

Yoma Land’s revenue is well supported by backlog of unrecognized revenue.

Real Estate Development registered a 45.5% YoY revenue increase. It is largely attributable to the revenue recognized from the completion of City Loft.

Unrecognised revenue now amounted to US$17mn as at 3Q20 vis-à-vis more than US$20mn in 2Q20.

Yoma Motors registered revenue growth of 33.3% largely attributable to the Heavy Equipment segment

More tractors and implements were sold due to pent up demand after many quarters of weaknesses arising from the exceptionally heavy monsoon last year. New Holland sold 124 tractors in the quarter compared to 61 tractors in 3M-Jun2019.

Revenue from Yoma Financial Services increased by 5.6% YoY underpinned by an enlarged finance lease portfolio in Yoma Fleet.

Vehicle numbers for Yoma Fleet grew by 11.1% year-on-year to 1,290 vehicles and third-party assets under management stood at US$45.6 million as of 30 June 2020.

Yoma Strategic HoldingsBUY (Maintained), TP: S$0.46, Last: S$0.29

(US$’mn) 3M-Jun19 3M-Jun20 YoY

Yoma Land 5.6 6.8 21.4%

Real estate development 3.3 4.8 45.5%

Real estate services 2.3 2.0 -13.0%

Yoma F&B 6.8 4.7 -30.9%

Yoma Financial Services 1.8 1.9 5.6%

Yoma Motors 4.2 5.6 33.3%

Investment and Corporate 0.2 0.2 -

Group Revenue 18.6 19.2 3.2%

Wave Money remains EBITDA positive despite weaker transaction numbers.

Due to the Thingyan holidays amidst the Myanmar New Year in April and COVID-19 measures, Wave Money’s OTC business was largely affected, which resulted in a decline in revenue and transaction numbers of 16.5% and 25.3% respectively from the previous quarter.

However, its e-wallet business continued to record double digit growth rate month-on-month as more people opt for cashless transactions and is on track to reach its 1.3 million MAUs target by December 2020.



Yoma Strategic HoldingsBUY (Maintained), TP: S$0.46, Last: S$0.29

Outlook

Pre-COVID, CityLoft has been recording a healthy booking rate at >50 units per month. CityLoft’s booking rate slowed significantly from April to May during COVID-19, but as the economy started to reopen at the end of May, buying interest noted a recovery. Booking rate was nearing half of pre-COVID levels by July.

Agriculture sector had been resilient and is expected to grow by 0.7% for the year. Meanwhile, the Myanmar government and NGOs are also supporting the agricultural industry by providing lower-interest loans for buying inputs and giving greater flexibility on loan repayments.

During this period, Wave Money will continue to work with various organisations such as Myanmar Agricultural development to disburse loans for farmers and Social Security Board to disburse medical and COVID-19 quarantine relief through the adoption of Wave Pay.

Yoma F&B witnessed improved performance MoM as business starts to recover in the coming quarter. Sales for July was nearing-pre-COVID level with same store sales growth recorded in certain days.

Maintain BUY with an unchanged TP of S$0.46.

- The Negatives

Yoma F&B revenue was down 31% YoY due to COVID-19 measures.

3Q20 revenue declined 31% YoY due to government-imposed lock downs, curfews and prohibitions on dine-in between April to mid-May and temporary store closures in severely affected trade zones.

The month of April was most affected as revenue fell 50% YoY. June recorded a smaller decline of c.25% YoY since the Myanmar government allowed restaurants to resume operations conditional upon adherence to certain guidelines at the end of May.



Timothy Ang

Research Analyst


24 August 2020

SG Bonds Weekly

Week 35



SG Bonds Weekly – Week 35

Last week:

• Olam International Ltd new

5.5-year 4% bond issued,

issue size S$400mn,

orderbooks S$900mn.

This week:

• Thurs-Fri, 27-28 Aug: Kansas

Fed Annual Policy Symposium



Wholesale bonds - S$250k

Bonds50 - S$50k

Requirements

• Accredited Investor: Min S$2mn in assets, S$1mn in financial assets or at least S$300k in annual income.

• Custodian account with Phillip

Contact

• [email protected]

• Phillip Bond Desk: 6212 1818

Bonds50 – Buy bonds in S$50k size

mailto:[email protected]



Phillip Model Bond Portfolio



Centurion Corporation Ltd: Stable so far (Credit View)

Positives

• Gearing and liquidity still adequate. Gearing stable at 54.1%.23% asset loss buffer and 33% debt headroom before MTNcovenants breached. Liquidity is high with cash/STborrowings at 1.67x. Secured bank moratoriums to extendbank loan repayments.

• New Contract with JTC to manage 4200 PBWA beds for 6months, about 25% of total PBWA portfolio size.

Negatives

• Higher provisions and rental delinquencies from PBWAcustomers. Provisions increased to S$1.5mn in 1H20 fromS$52k in 1H19.

• PBSA occupancies fell across the board. From travelrestrictions and university courses uncertainty. But PBWAEBIT contributions enough to cover interest expenses.

Outlook: PBWA will support the group for the time being. Headwinds expected to continue for PBSA. Concerns on rent receivables may be softenby soon to be completed testing of dorm workers and resumption of construction activities, of which PBWA has 48% exposure to.

Neutral on the CENSP 5.5% 22NC21 bond as we continue to monitor COVID-19 impact. But we think it is an interesting short-tenor play as it has astep up of 2.5% if not called on 1 Feb 2021. Coupon will step up to 8%, which is incentive for Centurion to call, and note that they have enoughshort-term liquidity to do so. Yield to worse is 4.80% and yield to maturity is 7.09%.



Paul Chew

Head Of Research


24 August 2020

JEP Holdings Ltd1H20 Results

Aviation to hibernate



JEP Holdings (REDUCE (Downgrade), TP: S$0.158, Last: S$0.19)

Positives

• Revenue was relatively resilient. Weakness in revenue came fromprecision manufacturing and trading whilst equipment manufacturingexpanded. The sales breakdown of these divisions were not disclosed.Total revenue only declined by 5% despite the disruption in operationsfrom the lockdown in Malaysia and Singapore.

Negatives

• Rise in administrative expenses. We were surprised that administrativeexpenses rose 8% YoY to S$3.2mn despite the decline in revenue. Theincrease was due to higher provision of staff cost related to performance.

Outlook: The collapse in international air travel has reversed from the previous insufficiency in aircraft production capacity to the current overcapacity.Rough 18 months for JEP as aviation equipment orders have frozen. The Boeing Company reported aircraft deliveries of only 19 in 2Q20, a 80% YoY dropfrom 90 in 2Q19. Some of the initiatives we believe JEP will undergo during this period of consolidation in aviation are: (i) UMS can tap on JEP to utilisetheir excess capacity for semiconductor orders; (ii) Further realign cost and production into the Malaysian factories; (iii) Pursue more semiconductorequipment and printing projects, in particular customers looking to shift out of China.

Downgrade to REDUCE with lower TP: With the lack of visibility, we are benchmarking our target price to book value. We still expect to be profitable butdepressed in the medium term. Any valuation based on earnings would understate the earnings potential of the aircraft machining operations.



Paul Chew

Head Of Research


24th August 2020

Thai Beverage PLC3Q20 Business Update

Margins expanded during the lockdown



Thai Beverage (BUY (Maintain), TP: S$0.82, Last: S$0.635)

Positives

• EBITDA margins expanded despite the drop in revenue. Revenue wasdown 15% YoY but EBITDA margins managed to expand due toaggressive cost-cutting especially in marketing and promotion expenses.EBITDA for the key spirits business only fell 3% YoY.

Negatives

• SABECO is the weakest link. In the 3Q20, beer volumes contracted almost20% due to SABECO. Domestic beer volume declined only marginally andmarket share is at a record high. The regulatory ban on drink drivingcontinues to curb beer consumption in Vietnam.

Outlook: As restaurants and entertainment venues reopen, we expect a recovery for THBEV operations in 4Q20. Beer sales in SABECO remains a concern,as the impact from regulation will weigh on consumption in the medium term.

Maintain BUY with unchanged TP: We maintain our BUY recommendation. FY20e PATMI is cut by 11% as we expect SABECO beer sales to remainsluggish. We are rolling over our target 18x PE to a normalised FY21e earning.



Paul Chew

Head Of Research


24 August 2020

Singapore Telecommunications Ltd1Q21 Business Update

No respite expected in 2020



SingTel (Neutral (Maintained), TP: S$2.44, Last: S$2.35)

Positives

• Optus mobile was relatively resilient. Australia mobile servicerevenue was relatively resilient, declining only 5.5% YoY at A$860mn.There was growth in the combined postpaid and SIM only planssubscriber base by 2.3% YoY.

Negatives

• Singapore mobile ARPU still slipping. ARPU still weighed down by theabsence of roaming revenue. Mobile blended ARPU is down toanother record low of S$23 (-27.7% YoY) in 1Q21.

• NBN pain for Optus. Without NBN, Australia consumer EBIT fell anincredulous 82% YoY to A$41mn. Weakness was across all segmentswith broadband bearing the brunt, in our opinion. On-net broadbandsubscribers are down 65% YoY whilst burdened by high operating cost.

Outlook: The two main pressure point for SingTel is Singapore mobile and Australia broadband. We expect at least another two quarters of weak YoYoperating performance.

Maintain NEUTRAL with unchanged TP of S$2.44. We are keeping our FY21e PATMI estimates unchanged. We do not see a turnaround in the resultsuntil international travel resumes materially for roaming revenue to recover. Australia needs to complete its NBN transition and remove the significantcost of running its existing broadband network to expect any recovery.



Week 35 - Phillip Singapore Weekly

Paul Chew

Head Of Research


24 August 2020



Week 35 – Tactical Views

https://www.poems.com.sg/education/events-seminars/

https://www.poems.com.sg/education/events-seminars/



COVID-19 Watch: Dropping in the U.S., KR is rising

Source: CEIC, WHO, PSR; *Large economies (Asia/Europe) - China, Germany, UK, Spain, Italy, France,

Japan, S Korea

0

50,000

100,000

150,000

200,000

250,000

300,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

13Mar 13Apr 13May 13Jun 13Jul 13Aug

COVID-19 New Daily Cases (7DMA)

Large Economies United States World (RHS)

571

257

0

1,000

2,000

3,000

4,000

5,000

6,000

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

21-Feb 13-Mar 3-Apr 24-Apr 15-May 5-Jun 26-Jun 17-Jul 7-Aug

COVID-19 New daily cases: CH, KR, Italy (7DMA)

China S Korea Italy - RHS



COVID-19 Watch: Community cases down to 2

Source: PSR, MOH

56

57

2

0

20

40

60

80

100

120

29-Jan-20 29-Feb-20 31-Mar-20 30-Apr-20 31-May-20 30-Jun-20 31-Jul-20

SG: Daily new Community

1 week before Daily Cases 7 Day Moving Average

Circ

uit

Brea

ker:

7 A

pr

Phas

e 1:

2 Ju

ne

Phas

e 2:

19

June



Activity indicators – Stalling, still staying at home

Source: https://www.google.com/covid19/mobility/

https://www.apple.com/covid19/mobility ;

0

20

40

60

80

100

120

19-Jan 9-Feb 1-Mar 22-Mar 12-Apr 3-May 24-May 14-Jun 5-Jul 26-Jul 16-Aug

SG: Apple Mobility Trends (7DMA)

CB/Phase 1/Phase 2 Driving Transit

https://www.google.com/covid19/mobility/

https://www.apple.com/covid19/mobility



SG: Healthcare admissions collapsed

-30%

-20%

-10%

0%

10%

2008 2010 2012 2014 2016 2018 2020

SG: Hospital Admissions 3MMA (YoY)

SG: Public Hospitals SG: Private Hospitals

-80%

-60%

-40%

-20%

0%

2008 2010 2012 2014 2016 2018 2020

SG: Specialist and Dental Admissions 3MMA (YoY)

Specialist Dental

Source: PSR, CEIC



SG: Air transport still very weak

1966

17

0

400

800

1200

1600

2000

2006 2007 2009 2010 2012 2013 2015 2017 2018 2020

SIA: Passengers Carried (000s - 3MMA)

32792

4834

0

5000

10000

15000

20000

25000

30000

35000

2006 2007 2009 2010 2012 2013 2015 2017 2018 2020

Changi Aircraft Movement (3MMA)

Source: PSR, CEIC



CH: Recovery is underway

-20%

0%

20%

40%

Apr-10 Apr-12 Apr-14 Apr-16 Apr-18 Apr-20

CH: Residential Space Sold (3MMA - YoY)

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

CH: Auto Sales

2018 2019 2020

Source: PSR, CEIC



US Elections: Odds is a Biden win

Source: PSR, oddsshark,Trump +115 or win $120 for $100 bet; Biden -150 or bet $135 to win $100,

realclearpolitiocs.com

-200

-150

-100

-50

0

50

100

150

200

4-Mar 4-Apr 4-May 4-Jun 4-Jul 4-Aug

2020 US Presidential Election Odds

Trump Biden

2016 Election Poll

% Seats Hillary Biden

Florida 1.2% 29 47.8% 50.3%

Michigan 0.2% 16 47.3% 48.7%

Pennsylvania 0.7% 20 47.5% 49.5%

Wischonsin 0.8% 10 46.5% 50.0%

Hillary Lost -2.1% 39


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