September 20, 2021
Rise and Shine For The Week Ahead (20 Sep)
“Hot” On The Plate US stocks pulled back from record highs. This is the second consecutive […]
What happened in markets this week, and what are analysts talking about?
•KGI; Maintain Outperform with higher TP S$1.42 The House thinks valuation are attractive amid the stronger than expected bulk carrier upcycle. The dry bulk carrier market is now at its highest since 2010. Uni Asia will be reporting its 1H results on 13 Aug and the house expects the Group’s fleet of 18 bulk carriers to drive financial performance. The House’s TP of $1.42 has an implied PB of 0.68x which is still a conservative 30% discount to international peers who are trading above 1x P/B.
HSI Tech represents the 30 largest tech companies listed in HK
The sell off in Chinese Tech companies continued after the Chinese authorities banned DiDi’s app from China’s smartphone app stores, alleging that the company “severely violated regulations around the collection of personal data”. It was also announced that Didi’s main app has also been removed from Tencent’s WeChat and Ant Group’s Alipay. Didi is China’s largest ride-hailing company, after buying over Uber’s Chinese operations since 2016, and has 88% of total trips taken in China in 4Q2020. Since February, China’s tech giants have lost more than $800 billion in market value, and more than 30% from its Feburary high for the Hang Seng Tech Index, as investors remain wary of the crackdown on the sector by local authorities.
Markets view on the sector has been varying, with some selectively increasing exposure to China Tech on increasingly attractive valuations with the price decline. The P/E of Hang Seng Tech Index has dropped from a peak of 45.6x in mid Feb to as los as 24.5x on 14 May. However, the crackdown has also put investors on the sidelines with daily inflows from the soutbound channel averaging just HK$194 million in June vs HK$2.5b- 2.6b in May and June per month according to data compiled by Bloomberg.
•UOB Kayhian; Highlighting Coal Producers amid a massive rally in coal prices. The House has highlighted potential beneficiaries of the 67% increase in Indonesia’s thermal coal prices year to date – Golden Energy and Geo Energy, who are both upstream stable coal miners. Golden Energy has a SOTP valuation TP of S$0.58.
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