Singapore Monthly Strategy - DBS Research 2018-03-05: Positive Earnings Revision; 6 Stocks To Buy Post 4Q17 Earnings

Singapore Monthly Strategy - DBS Vickers 2018-03-05: Positive Earnings Revision Singapore Stocks To Buy Post 4Q17 Earnings ROXY-PACIFIC HOLDINGS LIMITED E8Z.SI NETLINK NBN TRUST CJLU.SI RIVERSTONE HOLDINGS LIMITED AP4.SI BREADTALK GROUP LIMITED 5DA.SI UOL GROUP LIMITED U14.SI

Singapore Monthly Strategy - Positive Earnings Revision




Looking back at February 



March Key Events 


China’s NPC Meeting - 

  • Xi Jinping's political grip further entrenched with central committee's recent proposal to remove constitutional clause limiting presidential service to two consecutive terms  
  • Stocks related to Xi JinPing’s economic projects to benefit – Gaobeidian project by Oxley, KSH, Heeton and Lian Beng are next to the latest Special Economic Zone at Xiongan 

FOMC meeting – 

  • Expect FED to hike its funds rate by 25bps to 1.75%. We see FFR at 2.25% by year-end.     


4Q earnings season delivers positive revision. 



STI year-end base objective raised to 3715. 

  • STI FY18F earnings revised up by 1.5%, FY19F earnings revised up 0.7% post results season. At 3480, STI currently trades below 13.89x (+0.25SD) 12-month forward PE, which is reasonably attractive given positive earnings revision trend.
  • We peg near-term support at 3440-3465. We lift 2018 base-case year-end objective to 3715 (previously 3688), optimistic 3816 (previously 3800).


Strategy 


Six stocks to buy post 4Q results season 




Favour mid- to late-recovery cycle play 

  • The synchronised global recovery has entered its second year. Meanwhile, Singapore’s recovery is expanding from the manufacturing to services and construction sectors while inflation expectations are rising.
  • The backdrop favours mid- to late-cycle plays such as capital goods, construction, basic materials, commodities related, consumer services. Our picks are Wilmar International, Breadtalk, Genting Singapore, SIA, Keppel Corp.   



Eyeing sell-through rates for upcoming launches 

  • Developers put up a strong performance in 2017 driven by a rebounding property market and land-banking story. This year though, the FTSE ST Real Estate Holdings Index (-0.7%) has underperformed STI (+3.2%) YTD. 2018 is about delivering strong project sell-through rates for newly land-banked sites.
  • Investors will be eying the slew of new launches in 1Q18, three from Roxy Pacific (The Navian already > 50% sold) and The Tapestry by City Dev
  • A strong sell-through rates could power next leg up for developers Our picks are City Dev (2-3 launches in 2018), Roxy Pacific (up to seven launches in 2018), UOL (three launches in 2018).






Kee Yan YEO CMT DBS Vickers | Janice CHUA DBS Vickers | http://www.dbsvickers.com/ 2018-03-05
DBS Vickers SGX Stock Analyst Report BUY Maintain BUY 0.690 Same 0.690
BUY Maintain BUY 0.970 Same 0.970
BUY Maintain BUY 1.270 Same 1.270
BUY Maintain BUY 2.050 Same 2.050
BUY Maintain BUY 10.150 Same 10.150



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