Daily Brief Singapore: GK Goh Holdings, Sheng Siong, DBS, AEM, XP Power Ltd and more

• GK Goh Holdings (GKG SP) has disclosed a voluntary conditional offer from management at S$1.26 per share, a 38.5% premium to the undisturbed price (24 February).
• The offer price is final barring a competitive situation. The VGO has a 90%+ minimum acceptance condition which can be waived or lowered. Irrevocables represent 62.89% of outstanding shares.
• The offer price is attractive in comparison to historical trading ranges. The offer will remain open for at least 28 days which points to the earliest of 11 April close.

• Sheng Siong reported a notable decline in same-store sales and operating profits (ex-one off income) for 6M/FY Dec2022 even as it marginally increased annual dividend payout to 70.5%.
• With Singapore’s 10-year Gov. bond yields at 3.34% (vs. sub1%, 3 years ago), dividend yield players like Sheng Siong (SSG SP) may not offer attractive risk-reward at current levels.
• Sheng Siong has traded at dividend yields ranging 3%-3.9% over past 3 years, mostly at a premium to Gov. bond yields. Given muted dividend growth potential, stock faces downside risk.

• 2022 net profit up 20% YoY, beating expectations.
• Final dividend of 42 S cents/share and special dividend of 50 S cents/share proposed.
• Flags downside risks to 2023 peak group NIM guidance, while keeping guidance for mid-single digit loan and double-digit fee income growth.

• AEM (AEM SP) reported record revenues and profits for FY22. Guidance for FY23 was underwhelming and margin pressure was much larger than feared
• On an 18-24 month horizon, we think AEM outperforms but in the short-term stock could see more downside as worries about margin pressure persist
• Lower Fair Value estimate to 6 SGD from 8 SGD (15x 0.40 EPS FY24).

XP Power (XP) battled through FY22 to meet strong customer demand despite numerous supply chain challenges. H2 performance was significantly better than H1 as supply chain pressures started to ease, and XP enters FY23 with a record £308m order book. The company is targeting 10% organic revenue growth across the cycle and a return to historic profitability levels; we expect XP to make progress towards these targets in FY23 and FY24 while reducing gearing.