In today’s briefing:
- Quiddity Leaderboard Singapore’s STI Sep 23: KDCREIT Facing Risk of Deletion
- Horizon Construction Development IPO: The Bull Case
- CIMC Enric (3899 HK): It’s Not My Fault, I’m Resilient
Quiddity Leaderboard Singapore’s STI Sep 23: KDCREIT Facing Risk of Deletion
- In this insight, we take a look at the potential index changes for Singapore’s ST index (“STI”) between now and the September 2023 index review.
- With roughly 4 more months left for the base date, Sembcorp Marine (SMM SP) seems to be an ADD but it is close to the border.
- Since the ranking system used for this index in based on prices as at a single point in time, the rankings could change significantly and our expectations could change too.
Horizon Construction Development IPO: The Bull Case
- Horizon Construction Development (1887128D HK)/HCD, a subsidiary of Far East Horizon (3360 HK), is pre-marketing an HKEx IPO to raise US$200-250 million, according to press reports.
- HCD is the largest equipment operation service provider in China in terms of revenue in 2021, according to Frost & Sullivan.
- The key elements of the bull case rest on market share gains, an anticipated post-COVID recovery boost, high revenue visibility, stable operating margin and young equipment life.
CIMC Enric (3899 HK): It’s Not My Fault, I’m Resilient
- We see the recent sell-down of CIMC Enric Holdings (3899 HK) unjustified. 1Q23 revenue grew a healthy 19.6%, and management indicated excellent margin expansion as well.
- New orders signed accelerated in Mar to 21.6%, from just 10.7% in Jan-Feb. Its order backlog reached Rmb18.9bn (+22.3%). For hydrogen business, new orders even grew 61%.
- Guidances are for double-digit revenue growth in FY23, and besides better gross margin, lower tax rates have benefited net margin. We estimate 1Q23 profit may have increased ~50%.
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