Singapore Strategy - DBS Research 2017-11-27: 2018 Top 15 Stock Picks (Part 2 Of 3)

Singapore Strategy - DBS Vickers 2017-11-27: 2018 Top 15 Stock Picks (Part 2 Of 3) Singapore Stock Market 2018 Top Stock Picks THAI BEVERAGE PUBLIC CO LTD Y92.SI UNITED OVERSEAS BANK LTD U11.SI UOL GROUP LIMITED U14.SI VENTURE CORPORATION LIMITED V03.SI APAC REALTY LIMITED CLN.SI

Singapore Strategy - 2018 Top 15 Stock Picks (Part 2 Of 3)

  • Singapore Market Focus - 2018 Outlook - Top 15 Stock Picks (Part 2) 

Thai Beverage (Rating: BUY, Target Price: $1.07) 

  • Following the end of the mourning period for the King in October 2017, consumption of beverages should resume, driving recovery in Thai Bev’s beer and spirits segments. This will underpin earnings recovery of 11% in 2018. 
  • We retain our positive view on Thai Bev, with the group leveraging on its dominant market position in Thailand to expand regionally. On a longer-term horizon, we believe its ongoing transformation into a regional beverage player will help to further re-rate the counter. 
  • Thai Bev is expected to register EPS CAGR of 10.2% during FY17F-19F, with dividend yield of c.3%.
  • See report: Thai Beverage Public Company - Toast To A Better Year Ahead

UOB (Rating: BUY , Target Price: $27.50) 

  • With probably the last leg in classifying NPLs from the oil & gas stress, we believe UOB should enter FY18 on a cleaner slate.
  • We reiterate our three catalysts for the stock:
    1. The property market recovery bodes well for UOB as it is perceived to be a proxy – UOB has the largest proportion of property-related loans vs peers; this should see loan growth improve as early as 3Q17,
    2. Imminent NIM improvement albeit backloaded; SIBOR/SOR finally edged up more visibly over the quarter which should see some repricing as early as 3Q17. The repricing effect typically takes approximately up to 90 days and as such, firmer NIM levels could be expected in 4Q17, spilling over to FY18, and
    3. While asset quality concerns may still linger, the quantum of new NPLs (9M17 vs 9M16) has eased; the end to asset quality woes should warrant a re-rating, which we believe would be the case in FY18.
  • See report: UOB - Wow After The Woe

UOL Group (Rating: BUY, Target Price: $10.15) 

  • UOL is trading at an attractive valuation of c.0.8x P/NAV with the consolidation of UIC. UOL has strengthened its control over UIC, inching up its stake to 49.78%. This is a significant move, positioning it to unlock value in UIC (owns a larger portfolio of investment and development properties, if it succeeds in gaining full control of UIC. 
  • The new property launches of recently purchased land sites in the en-bloc market will drive momentum for the stock in 2018. UOL is a key beneficiary of the robust residential property market, being one of the more aggressive developers to replenish its land bank over the last two years. In addition, the turnaround in the hospitality segment bodes well for UOL’s hotel properties, and now with UIC’s hotel properties.
  • See report: UOL Group - Growing Big Slowly And Steadily

Venture (Rating: BUY, Target Price: $26.00) 

  • Venture is set to achieve record earnings in FY17F. Though its share price has gained over 110% YTD, fuelled by positive industry backdrop and excellent execution, we believe there is still room to run as Venture continues to deliver superior earnings performance. 
  • Venture’s tactical switch to a high-mix low-volume strategy, and diversification into new segments has led to margin improvements. Expectations of double-digit growth at key industry clusters provide strong visibility for Venture’s revenue growth prospects. 
  • We continue to like Venture, which stands out for its unique positioning at the forefront of innovation and has a proven track record.
  • See report: Venture Corporation - Setting A Scorching Pace

APAC Realty (Rating: BUY, Target Price: $1.12) 

  • APAC Realty is the purest proxy to Singapore residential volumes. ERA Realty, a wholly-owned subsidiary of APAC Realty, is one of Singapore’s largest real estate agencies with approximately 6,176 registered agents, as at 10 July 2017. 
  • We believe that APAC Realty remains poised to deliver a robust 10% 2-year CAGR in EPS on the back of a turn in Singapore residential market.
  • See report: APAC Realty - All Guns Blazing

Singapore Research DBS Vickers | http://www.dbsvickers.com/ 2017-11-27
DBS Vickers SGX Stock Analyst Report BUY Maintain BUY 1.070 Same 1.070
BUY Maintain BUY 27.50 Same 27.50
BUY Maintain BUY 10.150 Same 10.150
BUY Maintain BUY 26.000 Same 26.000
BUY Maintain BUY 1.120 Same 1.120