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28 September 2022: Genting Singapore (GENS SP), TRIP.COM (9961 HK)

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

  • 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)

TRIP.COM (9961 HK):  Japan, Taiwan, and Hong Kong reopen 

  • Buy Entry – 218 Target – 235 Stop Loss – 210
  • Group Limited, formerly International, Ltd., is a travel service provider in China that provides accommodation booking, transportation ticketing, package tours and corporate travel management. The company aggregates hotel and transportation information to help leisure and business travellers make reservations. The company helps leisure travellers book travel packages and guided tours and helps corporate clients manage their travel needs. The company also offers a range of travel-related services to meet the different booking and travel needs of leisure and business travellers, including visitor reviews, attraction tickets, travel-related financial services, car services, travel insurance services and passport services. The company also offers package tours for independent leisure travellers, including tour groups, semi-tour groups and private groups, as well as package tours that require different transportation arrangements (such as cruise, buses or self-driving).
  • 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.
  • 2Q22 results review. Net revenue dropped by 32% YoY and 2% QoQ to RMB4.0bn due to the continued disruptions resulting from the COVID-19 resurgence in China. Gross profit dropped by 35.0% YoY and 0.2% QoQ to RMB3.0bn. Net profit attributable to company shareholders was RMB69mn compared to a net loss of RMB647mn during the same period in 2021 due mainly to effective cost control.
  • Updated market consensus of the EPS in FY22/23 is RMB1.55/RMB7.14 respectively, which translates to 121.0x/26.3x forward PE. Bloomberg consensus average 12-month target price is HK$262.31.

(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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  • Hertz Global Holdings Inc (HTZ US) jumped 4.4% after the company announced a partnership with BP’s electric vehicle charging unit that will put thousands of charging stations at Hertz locations. Many of the stations will be used to charge Hertz’s growing fleet of electric vehicles, but some will be available for public use.
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  • Yangzijiang Shipbuilding Holdings Ltd (YZJSGD SP) fell 2.7% yesterday. The US dollar index corrected from Monday’s high. The drop was due to some profit-taking movements.
  • Nippecraft Ltd (NIP SP) surged 10.5% yesterday. With Singapore’s core inflation of 5.1% near 14 year high in August, consumer durable goods have risen alongside the rise in consumer prices.
  • Genting Singapore Ltd (GENS SP) rose 1.3% yesterday. Singapore will be hosting Asia’s first Formula One race this weekend since the pandemic. Tens of thousands of fans are expected to converge for the Singapore Grand Prix from Friday (Sep 30) to Sunday as the night race roars back after a two-year absence because of COVID-19. Furthermore, about 25 corporate meetings and events, including the Forbes Global CEO Conference, are also scheduled during this period, allowing executives to mix work and play. Hotel bookings have been brisk, even with room rates estimated to be up to 50 per cent higher than they were pre-COVID.
  • StarHub Ltd (STH SP) rose 1.8% yesterday. Starhub is currently holding 1,263,994 treasury shares, after a share buy-back on 26 September. The company purchased 330,000 shares, for S$378,269.07 at an average price of S$1.14 per share.
  • First Resources Ltd (FR SP) climbed 1.4% yesterday. On the evening of 26 September, First Resources announced a share buy-back of 600,000 shares to be held as treasury shares. The shares were purchased at an average of S$1.425 per share and the total consideration was S$856,464.14. It currently has a total of 10,997,500 treasury shares. 

Hong Kong

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  • Asymchem Laboratories Tianjin Co Ltd (6821 HK) surged 8.1% yesterday. The company announced on September 26, plans to invest up to 5 billion yuan to build new CDMO projects, change the use of some of the raised funds and add new investment projects. Guosheng Securities commented that in the next few years, the company is expected to show rapid growth with the increase of commercial projects, maintaining a “buy” rating. 
  • Hygeia Healthcare Holdings Co Ltd (6078 HK) climbed 8.8% yesterday. It was reported on 26 September, according to data disclosed on the Hong Kong Stock Exchange website, E Fund Management Company increased its holdings of Hygeia Medical twice in September. Their second purchase amounted to nearly 6.3 million shares on 22 September, holding 37.2722 million shares, approximately 6.04% of the total proportion of Hygeia Healthcare shares. 
  • Innovent Biologics Inc (1801 HK) increased 7.7% yesterday. Recently, the company’s second largest institutional shareholder, The Capital Group, has increased its positions by 1.943 million shares, and the proportion of long positions has risen from 5.02%  to 6.04%. Deutsche Bank said it expects to see some early signs of success in its third-quarter results. 
  • Tongcheng Travel Holdings Ltd (780 HK) and H World Group Ltd (1179 HK) rose 7.6% and 8.4% yesterday, along with other travel stocks. On the news, the National Day travel report released by Meituan showed that the search volume of keywords such as “local travel, surrounding travel” soared by 440% month-on-month. Searches in cities such as Beijing, Shanghai, Suzhou, Guangzhou, and Shenzhen increased significantly. In addition, compared to making travel plans more than a week in advance in the past, this holiday people are more inclined to find good places for leisure and vacation around the local area within 3 days before or even on the same day.

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Trading Dashboard Update: Cut loss on Singapore Airlines (SIA SP) at S$5.17.

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