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3 October 2022: Genting Singapore (GENS SP), Samsonite International S.A. (1910 HK)

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Genting Singapore (GENS SP): “Rooms” are hot

  • RE-ITERATE BUY Entry – 0.780 Target – 0.835 Stop Loss – 0.750
  • Genting Singapore is best known for its award-winning flagship project Resorts World Sentosa, one of the largest fully integrated destination resorts in South East Asia. Genting Singapore is one of the constituent stocks of the FTSE Straits Times Index.
  • Hotel prices hit a 10-year high. Singapore hotel room prices exceeded the pre-Covid level and hit a high in almost a decade in July 2022. As of July, the average room rate reached S$259/night, up c.70% YoY. The strong demand was driven by the increase in visitor arrivals amidst easing Covid-19 restrictions. Visitor arrivals in Singapore rose for the sixth straight month in July to 726,601, up from 543,733 in June, according to the tourism board.

Singapore hotel room price by tier

(Source: Singapore Tourism Analytics Network)

  • Upcoming high-profile events pushing hotel prices higher. This week, hundreds of chief executives, crypto investors and innovators, and even a Bollywood star are flying in for a series of high-profile Mice events. The Singapore Tourism Board mentioned that nearly 90,000 delegates would be expected to attend about 25 Mice events around this period, similar to the number of events held pre-Covid-19. Some of the events held this week include the crypto conference – Token2049, the 20th Forbes Global CEO Conference, the ninth annual Milken Institute Asia Summit and the inaugural edition of the Time100 Leadership Forum. A number of these events will be held concurrently with the Formula One Grand Prix, taking place between Friday to Sunday. The entertainment lineup this weekend includes performances by Marshmello, Westlife and Green Day. Other big names in entertainment coming to Singapore later this year include Justin Bieber, Maroon Five, Guns N’ Roses and Jay Chou. 
  • Updated market consensus of the EPS growth in FY22/23 is 82.1%/60.7% YoY respectively, which translates to 28.2x/17.5x forward PE. Current PER is 53.1x. Bloomberg consensus average 12-month target price is S$0.95.

(Source: Bloomberg)

DBS Group Holdings Ltd (DBS SP): Tailwinds from rate hikes

  • RE-ITERATE BUY Entry 33.0 – Target – 34.5 Stop Loss – 32.3
  • DBS Group Holdings Limited and its subsidiaries provide a variety of financial services. The company offers mortgage financing, lease and hire purchase financing, nominee and trustee, funds management, corporate advisory and brokerage services. DBS Group also is the primary dealer of Singapore government securities. DBS Bank Ltd operates as a bank offering wealth management, personal, and business banking services. DBS Bank serves customers worldwide. 
  • Housing loan rate adjustments. After the recent rate hike from the United States Federal Reserve, DBS announced that it would temporarily cease its fixed-rate home loans as the loan rates on these packages are being reviewed. The bank however continues to offer floating rate packages which are pegged to the SORA. By putting a pause on fixed-rate home loan packages in this volatile interest rate market, they are mitigating their risks and passing them on to their borrowers.
  • Benefiting from higher Interest rates. With the constant rise in interest rates, DBS will be able to increase its margins when lending money to borrowers. Additionally, by taking advantage of the difference between the interest paid out to lenders and the interest earned from short-term investments, their profits will grow.
  • Expansion of services. With the rapid boom of the cryptocurrency sector and the surge in the volume of crypto transactions carried out on its members-only platform, DBS recently expanded access to its crypto trading services. It announced the roll-out of self-directed crypto trading on DBS digibank, enabling 100,000 of the bank’s wealth clients who are accredited investors to trade cryptocurrencies on the DBS Digital Exchange (DDEx) at their convenience. These clients will be able to trade four cryptocurrencies – Bitcoin, Bitcoin Cash, Ether and Ripple – on DDEx with a minimum investment of S$500. 
  • The updated market consensus of the EPS growth in FY22/23 is 15.2%/18.7% YoY, respectively, translating to 11.1×/9.4x forward PE. The current PER is 12.8x. Bloomberg consensus average 12-month target price is S$39.31.

(Source: Bloomberg)

Samsonite International S.A. (1910 HK): Price pulled back to Pre-covid levels

  • Buy Entry – 18.0 Target – 20.0 Stop Loss – 17.0
  • Samsonite International S.A. is a Hong Kong-based company principally engaged in the design, manufacture, sourcing and distribution of luggages, business and computer bags, outdoor and casual bags, travel accessories and slim protective cases for personal electronic devices. The Company operates its business through three segments. The Travel Bag segment is engaged in travel products with suitcases and carry-ons of three main categories, including hard-side, soft-side and hybrid luggages. The Casual Bags segment is engaged in daily use, including different types of backpacks, female and male shoulder bags and wheeled duffel bags. The Business Bags segment is engaged in business use, including rolling mobile office bags, briefcases and computer bags.
  • Tailwinds of Asia tourism. Japan will fully reopen to foreign tourists from 11th October onwards. Tourists will no longer need a visa to enter the country. Taiwan will reopen its borders from 13 October onwards. Arrivals will be asked to self-monitor for seven days. From 26 October, travellers arriving in Hong Kong will no longer have to go into mandatory hotel quarantine.
  • July air travel recovery continued to recover. According to IATA, the total demand for air travel in July 2022 (measured in revenue passenger kilometers or RPKs) was up 58.8% YoY. Global traffic was at 75.6% of pre-Covid levels. July domestic air travel was up 4.1% YoY. Overall, July domestic traffic was 86.9% of July 2019. International RPKs rose 150.6% YoY in July. July 2022 international RPKs reached 67.9% of July 2019 levels.
  • 1H22 results review. Net sales jumped by 58.9% (+66.9% constant currency) YoY to US$1,270.2mn. Operating profit arrived at US$159.9mn compared to a loss of US$86.4mn during the same period last year. Profit attributable to the equity shareholders arrived at US$56.3mn in 1H22 compared to a loss of US$142.5mn in 1H21. The turnaround of the business and financials was due mainly to the continued easing of COVID restrictions and the ensuing recovery of both domestic and overseas travel. North America, Latin America, and Europe saw a strong recovery. But the slowdown in China dragged the accelerated recovery in Asia. 
  • The updated market consensus of the EPS growth in FY22/23/24  is 1,222.2%/42.9%/20.3% YoY respectively, translating to 18.4×/12.8x/10.7x forward PE. The current PER is 16.4x. Bloomberg consensus average 12-month target price is HK$25.17.

(Source: Bloomberg)

Tsingtao Brewery Company Limited (168 HK): A FIFA World Cup themed play

  • RE-ITERATE Buy Entry – 70 Target – 80 Stop Loss – 65
  • Tsingtao Brewery Company Limited, together with its subsidiaries, engages in the production, distribution, wholesale, and retail sale of beer products worldwide. The company sells its beer products primarily under the Tsingtaoand and Laoshan brand names. It also provides wealth management, and agency collection and payment services; and financing, construction, and logistics services, as well as technology promotion and application services.
  • FIFA World Cup Qatar 2022 in two months. The once in every four years FIFA World Cup is going to take place from November to December 2022. This is the global largest sports event after the Tokyo Olympic Games, and it is expected to attract a record high of spectators as most countries have eased COVID restrictions. Accordingly, it will stimulate sales of alcohol and other drinks. The beer feast will take place during the world cup period.   
  • 1H22 earnings review. Revenue grew by 5.4% YoY to RMB19.3bn. Gross profit dropped by 9.6% YoY to RMB7.3bn. GPM dropped by 6.3ppts to 38.1%. Net profit attributable to shareholders of the company grew by 18.1% YoY to RMB2.9bn. NPM increased by 1.3ppts to 14.8%. The growth of the bottom line was due mainly to the upgrade of the product mix and improvement of cost control.  
  • The updated market consensus of the EPS growth in FY22/23 is 1.5%/17.1% YoY, respectively, translating to 27.4×/23.4x forward PE. The current PER is 24.4x. Bloomberg consensus average 12-month target price is HK$89.35.

(Source: Bloomberg)

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United States

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Precious Metals +1.74%Gold Price Forecast: XAU/USD surrenders intraday gains to weekly high, back below $1,665 level

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Real Estate Investment Trusts+1.06%BofA Strategists See Wall Street Rout Forcing Asset Sales

American Tower Corp (AMT US)
Steel+0.67%Iron ore price marks quarterly losses on China covid, property woes


Top Sector Losers

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Apparel/Footwear-9.66%Nike feels squeeze from strong dollar and discounts

Nike Inc (NKE US)
Cable/Satellite TV-3.15%Dow tumbles 500 points on Friday to end September down nearly 9%

Comcast Corp (CMCSA US)
Telecommunications Equipment -2.74%Wall St posts third straight quarterly loss as inflation weighs, recession looms

Apple Inc (AAPL US)
  • Nike Inc (NKE US) shares dropped 12.8% after the sneaker giant said Thursday its inventory was overstocked, up 44% in its latest quarter. As a result it will offer more discounts to clear out the excess merchandise. Other retailers were also dragged down, with Lululemon Athletica and Under Armour losing almost 6% and nearly 5% respectively.
  • Rent-A-Center Inc (RCII US) slipped 21.6% after the company slashed its current-quarter earnings guidance, saying that economic conditions have weighed on consumer traffic and payment patterns.
  • Carnival Corp (CCL US) plunged 23.3% after the company forecast a loss for the fourth quarter, saying high fuel prices and inflation will delay its return to profitability. Royal Caribbean Cruises Ltd (RCL US) and Norwegian Cruise Line Holdings Ltd (NCLH US) also slipped, falling 13.2% and 18.0%, respectively.
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  • Sembcorp Marine Ltd (SMM SP) rose 3.9% on Friday. Keppel Shipyard announced on Wednesday that it secured a repeat contract for a newbuild floating production, storage and offloading vessel worth about US$2.8 billion ($4 billion). The tender for this contract was from Brazil’s national oil company, Petroleo Brasileiro (Petrobras). The contract will see Keppel offshore and marine undertake the engineering, procurement and construction of a P-83 FPSO vessel. With this order, Keppel’s O&M unit will see its order book increase to $11.8 billion.
  • NIO Inc (NIO SP) fell 6.2% on Friday. China’s yuan slumped around 4% in September as the Fed’s tightening spurred a rally in the dollar against other currencies, falling to a record low against the dollar offshore, while its onshore rate was around levels not seen since the 2008 financial crisis.
  • SATS Ltd (SATS SP) continued to fall 2.0% on Friday, following the company’s deal to buy the world’s largest air cargo handler for $1.64 billion. The ground handling and catering provider announced on Wednesday it will acquire Paris-based Worldwide Flight Services. The combined entity’s network will cover trade routes responsible for more than 50 percent of global air cargo volume.
  • Golden Energy & Resources Ltd (GER SP) and Geo Energy Resources Ltd (GERL SP) rose 6.0% and 2.8% respectively on Friday. Coal demand is increasing with the energy crisis and soaring energy prices have forced Europe into burning more coal again in order to keep the lights on, according to the chief executive of QatarEnergy. Europe has said it is doubling down on clean energy sources to reduce reliance on fossil fuels and rogue fossil fuel providers such as Russia. However, the soaring price of natural gas has forced many governments in Europe to restart reserve coal or oil-fired capacity in recent months or to extend the availability of coal plants beyond their original phase-out date.

Hong Kong

Top Sector Gainers

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Semiconductors+2.68%The ‘chip choke’ on China may breathe air into semiconductor industry

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Real Estate Investment Trust+2.01%China Tells Banks to Provide $85 Billion in Property Funding

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Insurance+1.84%There’s a “strong optimism” for insurance in APAC region

AIA Group Ltd (1299 HK)

Top Sector Losers

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Airline Services-1.91%China dashes travel blitz hopes for Golden Week

Cathay Pacific Airways Ltd (293 HK)
Other Financials-1.60%China Shares Plunge to Lowest Valuation on Record in Hong Kong

Hong Kong Exchanges & Clearing Ltd (388 HK)
Travel & Tourism-1.58%Travel just a memory for Chinese staying home for the National Day holiday Group Ltd
(9961 HK)
  • Zhejiang Leapmotor Technology Co Ltd (9863 HK) slumped again by 22.3% on Friday, the second day of its listing. Compared with the final offering price of Leapmotor IPO of HK$48, it has dropped by 48%, and the market value is less than HK$30 billion. Regarding the sharp drop in the stock price of Leapmotor for two consecutive days, Ernst & Young strategic consulting partner Zhang Yichao told Jiemian News, “The market is still mainly concerned about profitability. A field that is considered difficult to make money by the market. There are many reference targets in the market now, and the valuation will naturally be revised after listing.”
  • NIO Inc (9866 HK) fell 7.3% on Friday. This was due to China’s yuan slumping around 4% in September as the Fed’s tightening spurred a rally in the dollar against other currencies, falling to a record low against the dollar offshore, while its onshore rate was around levels not seen since the 2008 financial crisis. Additionally, its competitor, Li Auto said in an update that its third-quarter deliveries were going to come up short of expectations. The company also said supply chain challenges are the issue and that demand remains strong. Nio could be facing similar supply chain constraints.
  • Country Garden Holdings Co Ltd (2007 HK) and Sino Land Co Ltd (83 HK) climbed 9.0% and 6.0% on Friday. The People’s Bank of China and the China Banking and Insurance Regulatory Commission issued a notice deciding to adjust the differentiated housing credit policy in stages. Among them, it is stipulated that for cities where the sales prices of newly-built commercial residential buildings from June to August 2022 have continuously dropped month-on-month and year-on-year, they can independently decide to maintain, reduce or cancel the lower limit of the local newly issued first-home loan interest rate in stages before the end of 2022. According to the statistics of E-House Research Institute, according to the housing price index data of 70 large and medium-sized cities released by the National Bureau of Statistics, at least 23 cities meet the requirements of the central bank’s new policy.
  • China Tourism Group Duty Free Corp Ltd (1880 HK) rose 7.5% yesterday. Morgan Stanley released a research report saying that it gave China CDF an “overweight” rating with a target price of HK$215. With the gradual recovery of China’s local tourism and network expansion, the bank expects the company’s revenue decline in the third quarter to narrow by 20% year-on-year, and return to growth of about 20% in the fourth quarter. The Group’s competitiveness has strengthened since mid-2020, with a constructive view on its mid- to long-term performance; the opening of Haikou International Duty Free City will be the next catalyst.

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Trading Dashboard Update: Cut loss on TRIP.COM (9961 HK) at HK$210.

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