In-Depth Analysis of Key Companies in the Financial Market

Broker: Lim & Tan Securities

Date of Report: December 3, 2024

Capitaland Investment Limited (CLI)

Capitaland Investment Limited (CLI) has announced a strategic acquisition with its arm, CapitaLand Malaysia Trust (CLMT). They will acquire a freehold automated logistics property from PTT Logistics Hub 1 Sdn. Bhd. for RM180.0 million. This acquisition aligns with the independent market valuation of RM180.5 million commissioned by MTrustee Berhad. The property, Elmina Logistics Hub, is situated within the established Elmina Business Park in Selangor. Expected to contribute positively to CLMT’s income, this purchase has a first-year gross yield of approximately 6.8% and is estimated to generate an annual gross rent of RM12.3 million. The construction is scheduled for completion in the first half of 2025, and CLMT will subsequently lease the property to Projek Tetap Teguh Sdn. Bhd. on a 10-year lease term with built-in rent escalations, providing income stability.

Strategic Growth

The Elmina Logistics Hub acquisition will expand CLMT’s portfolio to 11 properties, increasing its new economy assets from 3% to 6% of its total portfolio by assets under management. Mr. Tan Choon Siang, CEO of CapitaLand Malaysia REIT Management Sdn. Bhd., expressed confidence in this transaction to strengthen CLMT’s industrial and logistics tenant base and improve portfolio resilience. CLI’s market cap stands at S\$13.8 billion, trading at 19x forward PE and 1x PB with a 4.5% dividend yield, and a consensus target price of S\$3.55, representing a 30% upside. The recommendation is to “Accumulate” CLI shares.

Sembcorp Industries (SCI)

Sembcorp Industries (SCI) has entered a 15-year renewable energy power purchase agreement (PPA) with Equinix, Inc. to supply up to 58.5MWp from its renewable energy portfolio in Singapore, starting in 2029. This adds to an earlier agreement for a 75MWp supply, bringing the total contracted capacity to 133.5MWp. Sembcorp is the largest solar energy provider in Singapore, dominating over half of the country’s 2025 solar energy target. The company is also a leading power provider to data centers, solidifying its position in Singapore’s solar energy market.

Future Prospects

SCI’s focus on data centers and solar energy aligns with the Singapore government’s push for green infrastructure and achieving carbon neutrality by 2030. Trading at just under 10x forward PE, 1.8x book, and a yield of just under 3%, SCI shows potential for growth. With a Bloomberg consensus target price of \$6.82, indicating a potential upside of nearly 30%, the recommendation is to “Accumulate” SCI shares.

Yangzijiang Shipbuilding

Yangzijiang Shipbuilding has secured contracts for 21 vessels, valued at US\$2.63 billion, including LNG dual-fuel and methanol dual-fuel containerships, oil tankers, and bulk carriers. These contracts, scheduled for delivery between 2027 and 2029, do not impact the 2024 financial earnings but contribute to a total of 119 effective shipbuilding contracts with an aggregate value of US\$14.27 billion.

Robust Outlook

With a market capitalization of \$9.6 billion, Yangzijiang Shipbuilding trades at 8-9x PE and offers a yield just under 3%. The Bloomberg consensus target price of \$3.25 suggests a 34% upside potential. Given its strong order book and attractive valuation, the recommendation remains “Accumulate” for Yangzijiang Shipbuilding.

Conclusion

Lim & Tan Securities provides a detailed analysis of these key companies, highlighting their strategic moves and growth potential in the current market landscape. With favorable recommendations, these companies present opportunities for investors to consider in their portfolios.