Stock Market Strategy
Singapore Top Stock Picks 2018
APAC REALTY LIMITED
CLN.SI
AVI-TECH ELECTRONICS LIMITED
BKY.SI
MOYA HOLDINGS ASIA LIMITED
5WE.SI
FOOD EMPIRE HOLDINGS LIMITED
F03.SI
HRNETGROUP LIMITED
CHZ.SI
UNITED OVERSEAS BANK LTD
U11.SI
SINGAPORE MEDICAL GROUP LTD
5OT.SI
VENTURE CORPORATION LIMITED
V03.SI
OUE HOSPITALITY TRUST
SK7.SI
MANULIFE US REIT
BTOU.SI
Singapore Strategy 2018 - There Is Still Potential To Generate Alpha
- Macroeconomic indicators are still supportive of growth - this time for different sectors. Our economics team is forecasting Singapore’s GDP to grow by 3% in 2018, slackening from an estimated growth of 3.3% YoY in 2017.
- The slowdown in growth is largely attributed to moderating export growth and slowdown in manufacturing. However, domestic demand should rebound modestly, cushioning some weakness in exports and manufacturing.
- We expect to witness higher private consumption, gradual recovery in residential property prices and higher tourist arrivals into Singapore during 2018.
USD/SGD - small tailwinds.
- USD/SGD is highly correlated to the FTSE Straits Times Index’s (FSSTI) earnings, with appreciation in SGD positively correlated to the higher index EPS. While this positive relationship may not seem intuitive, we believe it can be explained by the lack of export driven companies in the index that would benefit from a weak SGD.
- Our forex team is eyeing marginal gains vs USD with a base case end-2018 of SGD1.32 (average: 1.33), stronger than 2017’s average of 1.38, providing some tailwind to index EPS growth.
Stock selection remains the key.
- With changing mix in Singapore’s growth constituents, we recommend that investors stay selective.
- Consumer: OVERWEIGHT with preference for companies with regional exposure. Juliana rates Dairy Farm and Food Empire as her preferred picks. She has little preference for companies with a Singapore-only exposure as their longer-term growth outlook remains weak.
- REITs: OVERWEIGHT with preference for hospitality and industrial. Ascendas REIT (AREIT) and OUE Hospitality Trust (OUEHT) are Top Picks. Vijay’s preference is for REITs that would be direct beneficiaries of improvement in economic activity, and/or have a strong balance sheet and can undertake accretive acquisitions.
- Banks: NEUTRAL with an OVERWEIGHT bias. UOB is Top Pick. Seng Choon thinks strong share price performance in 2017 could limit upside in 2018. However, he highlights that the positive impact of the interest rate upcycle on earnings cannot not be taken lightly. UOB’s large exposure to residential mortgage market and strong balance sheet makes a Top Pick.
- Property: NEUTRAL with APAC Realty as Top Pick. Vijay expects property prices to rise by 3-7% in 2018. He assesses that recent en-bloc frenzy and intense competition in land sales could limit developer margins and also sees risk of government implementing more supply side measures.
- Quality small & mid cap names. Jarick expects Avi-Tech Electronics (AviTech), HRnetGroup, Moya Holdings Asia (Moya) and Singapore Medical Group (SMG) to delivery strong returns in 2018.
Singapore Top Stock Picks For 2018
| Company Name | Rating | Share Price (8-Dec-17) |
Target Price | Upside % | P/E (x) Dec-18F |
P/B (x) Dec-18F |
Yield % Dec-18F |
Report |
|---|---|---|---|---|---|---|---|---|
| APAC REALTY | BUY | SGD 0.87 | SGD 1.20 | 38.7 | 11.0 | 2.2 | 4.5 | |
| ASCENDAS REIT | BUY | SGD 2.67 | SGD 2.90 | 8.6 | 13.0 | 1.2 | 6.1 | |
| AVI-TECH ELECTRONICS | BUY | SGD 0.44 | SGD 0.59 | 35.6 | 8.7 | 1.3 | 5.8 | |
| DAIRY FARM | BUY | USD 7.90 | USD 9.53 | 20.7 | 19.2 | 5.4 | 3.1 | |
| FOOD EMPIRE HOLDINGS | BUY | SGD 0.64 | SGD 1.00 | 56.9 | 11.5 | 1.3 | 1.5 | |
| HRNETGROUP | BUY | SGD 0.82 | SGD 1.14 | 39.0 | 17.3 | 2.5 | 2.9 | |
| MANULIFE US REIT | BUY | USD 0.91 | USD 0.98 | 8.4 | 13.8 | 1.1 | 6.6 | |
| MOYA HOLDINGS ASIA | BUY | SGD 0.08 | SGD 0.17 | 102.4 | 8.4 | 1.4 | - | |
| OUE HOSPITALITY TRUST | BUY | SGD 0.82 | SGD 0.88 | 8.0 | 18.1 | 1.1 | 6.4 | |
| SINGAPORE MEDICAL GROUP | BUY | SGD 0.57 | SGD 0.79 | 39.8 | 19.1 | 4.0 | - | |
| UNITED OVERSEAS BANK LTD | BUY | SGD 25.88 | SGD 28.88 | 11.6 | 11.4 | 1.1 | 2.7 | |
| VENTURE CORPORATION | BUY | SGD 20.26 | SGD 24.10 | 19.0 | 15.1 | 2.3 | 3.9 |
Singapore Research Team
RHB Invest
|
http://www.rhbinvest.com.sg/
2017-12-19
RHB Invest
SGX Stock
Analyst Report
1.200
Same
1.200
0.590
Same
0.590
0.170
Same
0.170
1.000
Same
1.000
1.140
Same
1.140
28.880
Same
28.880
0.790
Same
0.790
24.100
Same
24.100
0.880
Same
0.880
0.980
Same
0.980
