SMC Monthly - DBS Research 2016-03-08: Review of Feb-16 Picks

SMC Monthly - DBS Research 2016-03-08: Review of Feb-16 Picks RIVERSTONE HOLDINGS LIMITED AP4.SI  MM2 ASIA LTD 41C .SI 

SMC Monthly - Review of Feb-16 Picks

Absolute price performance of indices (2 Feb – 7 Mar): 

  • STI: 2579.23 to 2823.51 / + 9.5% 
  • FSTS Index: 377.54 to 398.07 / + 5.4% 
  • FSTM Index: 630.80 to 679.36/ + 7.7% 

Top picks gained 14.5% on average – outperforming the market 

  • Between 2 Feb and 7 Mar, our picks surged 14.5% on average, outperforming the small-cap index (FSTS Index), midcap index (FSTM Index), and STI, which also rebounded by 9.5%, 5.4% and 7.7%, respectively. 
  • The outperformance was led by mm2 Asia and OSIM International’s exceptional run-up (whose share prices rose 42.9% and 23.7%, respectively, since our last issue). 
  • During the period, Japfa Ltd also gained 10.5% as it reported 4Q15 earnings which were significantly ahead of expectations. 
  • A privatisation offer of S$1.32 for OSIM International was also made by its Chairman and CEO, Mr. Ron Sim. 

What happened with Riverstone? 

  • Riverstone Holdings [- 10.8% m-o-m] Riverstone was not spared as the sector continued to be sold down on fears of potential oversupply ahead, and the strengthening ringgit against the USD, which raised concerns of profitability for the rubber glove exporters. 
  • The stock is currently trading down 10.8% even as it reported strong earnings in 4Q15 (in spite of the challenges faced during the quarter) but has held up better than its peers, which have declined between 14% and 18%. 
  • Given Riverstone’s strengths in the high-tech and niche cleanroom segment, which is less competitive and price-sensitive, we expect Riverstone’s margins and growth prospects to remain intact in the medium term.

Paul YONG CFA DBS Vickers | Singapore Research Team DBS Vickers | http://www.dbsvickers.com/ 2016-03-08
DBS Vickers SGX Stock Analyst Report BUY Maintain BUY 1.41 Same 1.41
BUY Initiate BUY 1.05 Same 1.05