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Bumitama Agri Ltd (BAL SP): Palm oil demand to maintain

• RE-ITERATE BUY Entry – 0.89 Target– 0.97 Stop Loss – 0.85
  
• Bumitama Agri Ltd. produces CPO and PK, with its oil palm plantations located in Indonesia. The Company’s primary business activities are cultivating and harvesting our oil palm trees, processing FFB from its oil palm plantations, its plasma plantations and third parties into CPO and PK and selling CPO and PK in Indonesia.
  
• Continued palm oil rally. The Council of Palm Oil Producing Countries (CPOPC) forecasts palm oil prices to range between RM4,000 and RM5,000 per tonne in 2025 due to stagnating production in key markets like Indonesia and Malaysia. Current prices around RM5,000 per tonne are seen as temporary, influenced by Malaysia’s floods and bullish market sentiment. Stagnation in production is attributed to ageing plantations, unpredictable weather, and limited expansion into new plantation areas, potentially leading to a global supply shortage and driving prices higher.
  
• High expectations. Bumitama Agri has demonstrated resilience over the past decade, navigating fluctuating palm oil prices driven by changing demand, adverse weather, and geopolitical tensions. The company has consistently delivered strong financial performance and shareholder returns, including a record 14% dividend yield in FY22 and 10% in FY23, supported by robust cash flow and a healthy balance sheet. Despite weather-related challenges and cost pressures in 1H24, Bumitama achieved significant QoQ growth in Q2, with gross profit, net profit, and EBITDA showing marked improvement. Core profit rose 43%, fueled by higher palm oil prices and easing cost pressures. Key growth drivers include Indonesia’s biodiesel mandate, set to increase blending requirements to 40% by 2025, boosting domestic consumption and reducing export volumes, thereby sustaining elevated global palm oil prices. Surging palm kernel prices further contribute to growth opportunities. Looking ahead, Bumitama is well-positioned for continued financial growth, supported by stable costs, strong demand, and favorable pricing for palm oil and palm kernel products.
  
• 1H24 results review. Revenue rose by 1.4% YoY to IDR7.6tn in 1H24, compared to IDR7.50tn in 1H23. Net profit fell by 29.5% to IDR1.00tn in 1H24, compared to IDR1.42tn in 1H23. Basic and Diluted EPS per share is DR494 in 1H24, compared to IDR686 in 1H23.
  
• Market Consensus.
  

(Source: Bloomberg)

DBS Group Holdings Ltd (DBS SP): Visionary move

• RE-ITERATE BUY Entry – 44 Target– 48 Stop Loss – 42
  
• DBS Group Holdings Limited and its subsidiaries provide a variety of financial services. The Company offers services including mortgage financing, lease and hire purchase financing, nominee and trustee, funds management, corporate advisory and brokerage. DBS Group also acts as the primary dealer in Singapore government securities.
  
• Reaping benefits from wealthy Russians. DBS Group Holdings has expanded its wealth management team to serve affluent Russian clients, navigating global sanctions-related complexities while ensuring strict compliance. Recent hires include two Russian-speaking private bankers, bringing the total to at least nine in Singapore. Over the past two years, DBS has recruited talent from Credit Suisse and Julius Baer, attracting over US$1 billion in client assets after Credit Suisse exited its Singapore-based Russian wealth operations. While Russian assets represent a small fraction of DBS’s US$401 billion under management, this segment has shown significant growth. To ensure compliance, Russian clients must hold at least US$20 million in assets and undergo rigorous screening to verify wealth sources and confirm they are not under sanctions. As global competitors like UBS, HSBC, and OCBC exit Russian transactions due to regulatory challenges, DBS benefits from reduced competition, gaining access to a larger client pool. With plans to double wealth management fees by 2027, this team expansion better positions DBS’s wealth management division to achieve its goal, boosting its assets under management and solidifying its presence in Asia’s expanding wealth market.
  
• IMDA partnership. DBS and the Infocomm Media Development Authority (IMDA) have launched the Spark GenAI program to encourage Singapore’s SMEs to adopt generative AI (gen AI) solutions. With only 4.2% of SMEs currently using AI, the program aims to engage 50,000 businesses over two years, guiding on integrating gen AI into operations such as customer engagement and marketing. Spark GenAI will offer online resources, quarterly workshops, tailored solution recommendations, and access to grants from IMDA and EnterpriseSG. It will also enhance digital resilience through cyber insurance and a cyber wellness course. As Southeast Asia’s digital economy is projected to reach S$352 billion by 2024, DBS emphasizes the importance of innovation for SMEs to remain competitive. Through these advanced technology solutions, DBS will help to drive SME growth and cement its relationship with this key client segment.
  
• 3Q24 results review. Total income for 3Q24 rose 11% to S$5.75bn and net profit rose 15% YoY to surpass S$3bn for the first time. DBS announced a new S$3bn share buyback programme and declared a Q3 dividend at S$0.54 per share.
  
• Market Consensus.
  

(Source: Bloomberg)

Sands China Ltd (1928 HK): Tourism recovery

• BUY Entry – 21.5 Target 24.5 Stop Loss – 20.0
  
• Sands China Ltd. is an investment holding company principally engaged in the development and operation of integrated resorts in Macao. The Company operates many places, including gaming areas, meeting space, convention and exhibition halls, retail and dining areas and entertainment venues. The Company operates its business through six segments: The Venetian Macao, Sands Cotai Central, The Plaza Macao, Sands Macao, Ferry and Other Operations and The Parisian Macao. Through its subsidiaries, the Company is also engaged in the provision of high speed ferry transportation services. The Company’s subsidiaries include Cotai Ferry Company Limited, Hotel (Macau) Limited and Development Limited.
  
• Visitor arrivals exceed expectations. Macao Government Tourism Office (MGTO) announced that visitor numbers to Macau are expected to surpass 33 million this year, meeting the government’s target set at the beginning of 2023. As of 10 November, over 30 million visitors had already arrived, averaging about 95,000 daily. This increase was partly influenced by the recent Macao Grand Prix and the approaching peak season in December. The Census and Statistics Department (DSEC) recorded approximately 1.68 million foreign visitors, with foreign arrivals making up 6.5% of the total in the first three quarters and an average of 2.88 million arrivals per month. This year’s target reflects a notable rise from 28.2 million visitors in 2023. The ongoing recovery in visitor levels is expected to boost tourism spending in Macau, benefiting Sands China.
  
• Partnership with NBA. Sands China recently entered into a multi-year partnership with the National Basketball Association (NBA) to bring basketball events to Macau. This partnership will see two NBA preseason games hosted annually at the Venetian Arena for the next five years, which began with the Brooklyn Nets and Phoenix Suns in October 2024. By hosting these globally recognized games, Sands China aims to enhance Macau’s tourism appeal, attracting international visitors and solidifying the city’s reputation as a premier destination for sports and entertainment. These events are expected to drive increased tourism revenue for Macau and boost Sands China’s guest traffic and revenue during the preseason game period.
  
• 1H24 earnings. Sands China’s revenue increased by 22.7% YoY to US$3.55 billion (HK$27.73 billion) for 1H24 from US$2.90 billion (HK$22.69 billion) in 1H23, with net revenues increasing across all business segments mainly driven by continued recovery in visitation and tourism spending in Macao. The group’s profit was US$541 million (HK$4.22 billion) in 1H24 an increase of 209.1% YoY, compared to US$175 million (HK$1.37 billion) in 1H23. Basic earnings per share rose to US 6.69 cents (HK52.24 cents) in 1H24, compared to US2.16 cents (HK16.93 cents) in 1H23.
  
• Market consensus.
  

(Source: Bloomberg)

Goldwind Science & Technology Co Ltd. (2208 HK): Spurring investments into renewable energy

• RE-ITERATE BUY Entry – 7.0 Target 8.0 Stop Loss – 6.5
  
• Goldwind Science & Technology Co Ltd, formerly Xinjiang Goldwind Science & Technology Co Ltd, is a China-based company that provides overall solutions for wind turbines, wind power services and wind farm development. The Company operates its businesses through four segments. The Wind Turbine Manufacturing and Sales segment is mainly engaged in the research and development, manufacturing and sales of wind turbines and their parts. The Wind Power Service segment mainly provides wind power-related consultants, wind farm construction and maintenance and transportation services. The Wind Farm Development segment is mainly engaged in the development and operation of wind farms. Other segment is mainly engaged in financial leasing and water treatment development and operation business. The Company conducts its businesses both in the domestic market and overseas markets.
  
• New Renewable Energy Consumption Benchmarks. China’s National Development and Reform Commission (NDRC) and National Energy Administration (NEA) have jointly released updated requirements for the percentage of energy that provinces must source from renewable generators in 2024 and 2025. These requirements are part of China’s renewable energy consumption guarantee mechanism, mandating a significant increase in the share of renewable energy in several provinces. The document also outlines tentative renewable energy consumption targets for 2025. Current data reveals that six provinces experienced increases exceeding 6 percentage points in their renewable energy consumption mandate between 2023 and 2024. China remains on track to achieve its renewable energy goals, aiming for renewable energy, including hydropower, to account for 40 percent of total national energy consumption by 2030. This benchmarks are likely to spur on more investment into renewable energy as well.
  
• Increasing use of renewable energy in China. China’s renewable energy utilization has reached or exceeded advanced international levels, demonstrating rapid progress in sustainable energy. The country has maintained strong momentum in renewable energy adoption, with a utilization rate of 97.6%, surpassing 95% for six consecutive years since 2018. Last year, newly installed renewable energy capacity rose to 290 million kW, 2.4 times that of 2022, accounting for 79% of the total new power generation capacity nationwide, making it the primary source of new power generation. This surge in capacity has spurred significant investments in solar, wind, and hydropower projects across the country. These efforts are part of China’s broader strategy to peak carbon emissions before 2030 and achieve carbon neutrality before 2060. Furthermore, China’s National Energy Administration also recently reported that 486 million Green Electricity Certificates (GECs) were issued during the first half of 2024– a 13-fold increase compared to the same period last year, further signalling progress towards the decarbonisation and reform of the power sector. Goldwind is likely to benefit from the increased investment and spending in renewable energy.
  
• Expanding presence. Goldwind Science & Technology has officially opened its first overseas wind turbine manufacturing plant in Brazil. The facility has begun production with a capacity to produce up to 150 turbines annually. Valued at approximately $18.2 million, this investment aims to strengthen local supply chains and leverage the region’s rich wind resources. While the plant will primarily serve the Brazilian market, it is also positioned to export equipment across South America via the port of Bahia. With this new facility, Goldwind is expected to secure a 24% to 30% share of the Brazilian wind turbine market.
  
• 1H24 earnings. The company’s revenue rose to RMB20.1bn in 1H24, +6.53% YoY, compared to RMB18.9bn in 1H23. The company’s net profit rose by 6.74% YoY to RMB1.44bn in 1H24, compared to RMB1.35bn in 1H23. Basic earnings per share rose to RMB0.32 in 1H24, compared to RMB0.28 in 1H23.
  
• Market consensus.
  

(Source: Bloomberg)

Home Depot Inc (HD US): Robust housing and related spending

• BUY Entry – 420 Target – 460 Stop Loss – 400
  
• The Home Depot, Inc. is a home improvement retailer. The Company offers wide range of building materials, home improvement, lawn, and garden products, as well as provides DIY ideas, installation, repair, and other services. Home Depot serves customers worldwide.
  
• Wealth effect. The current bullish trend in the US equities market could encourage investors to capitalize on their gains by diversifying into real estate. This increased investor confidence in the property market is likely to translate into higher demand for homes. As a result, we can expect an uptick in home-building activity, leading to increased demand for home improvement materials, which would benefit Home Depot as a leading supplier in this sector.
  
• Strong performance to continue. The National Retail Federation (NRF) reported an estimated 197 million shoppers during the Thanksgiving holiday weekend. Furthermore, the NRF forecasts record holiday season spending between 1 November and 31 December, with an expected growth of 2.5% to 3.5% over 2023, reaching a total of US$979.5 billion to US$989 billion. Despite the holiday shopping surge, consumers still have ample time to complete their holiday shopping lists. Home Depot is poised to benefit from continued demand for hurricane recovery materials as affected homeowners undertake repairs. Additionally, the holiday season traditionally sees a surge in demand for holiday decorations, further bolstering Home Depot’s revenue growth.
  
• 3Q24 results. Revenue reached US$40.2 billion, a YoY increase of 6.6%, exceeding market expectations by US$980 million. Non-GAAP earnings per share were US$3.78, beating expectations by US$0.13. The company raised its fourth-quarter guidance for total sales to rise about 4% and a comparable sales decline of 2.5% YoY, compared to its previous forecast of 2.5% to 3.5% and a decline of 3% to 4% respectively. It also revised its adjusted earnings per share guidance to a 1% decline from the prior forecast of a 1% to 3% drop. It declared a quarterly dividend of US$2.25 in line with the previous.
  
• Market consensus.
  

(Source: Bloomberg)

Sprouts Farmers Market Inc (SFM US): Appeal to health-conscious consumers

• RE-ITERATE BUY Entry – 150 Target – 170 Stop Loss – 140
  
• Sprouts Farmers Market, Inc. operates a chain of retail grocery stores. The Company offers meats, cheese, dairy products, bakery, beer and wine, bulk foods, vitamins, and supplements. Sprouts Farmers Market serves customers throughout the United States.
  
• Resilient demand from mid- to high-end consumers. Despite high inflation and rising interest rates, mid- to high-end consumers in the United States have maintained their overall spending levels, though their consumption habits have shifted. The COVID-19 pandemic heightened awareness of food safety and quality, driving steady growth in demand for organic products. Additionally, the wealth effect from stock market gains has supported increased spending on premium organic food among affluent consumer groups.
  
• Strong growth and performance. As of 3Q24, Sprouts Farmers Market operates 428 stores and plans to expand its footprint with an annual growth rate of 10% in new store openings. Comparable store sales rose 8.4% YoY, while gross profit margin reached a record high of 38.1% during the quarter. Online sales also grew by 36% YoY, accounting for 14.5% of total sales, reflecting the company’s ability to adapt to evolving consumer preferences and capitalize on digital growth opportunities.
  
• 3Q24 results. Revenue reached US$1.9 billion, a YoY increase of 11.8%, exceeding market expectations by US$20 million. Non-GAAP earnings per share were US$0.91, beating expectations by US$0.14. The company’s fourth-quarter guidance is that net sales will increase by approximately 12% YoY; comparable store sales will increase by 8% to 10% YoY; adjusted diluted earnings per share will be in the range of US$0.67 to US$0.71, and market expectations are US$0.58.
  
• Market consensus.
  

(Source: Bloomberg)

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Trading Dashboard Update: Add CSE Global Ltd (CSE SP) at S$0.46 and Goldwind Science & Technology Co Ltd. (2208 HK) at HK$7.