Singapore Stock Alpha Picks (April 2018) - UOB Kay Hian 2018-04-03: Selectively Emphasising Defensives. Added Sheng Siong.

Singapore Stock Alpha Picks - UOB Kay Hian 2018-04-03: Selectively Emphasising Defensives. Added Sheng Siong. Singapore Stock Alpha Picks 2018 April SHENG SIONG GROUP LTD OV8.SI CDL HOSPITALITY TRUSTS J85.SI CITIC ENVIROTECH LTD. CEE.SI CITY DEVELOPMENTS LIMITED C09.SI DBS GROUP HOLDINGS LTD D05.SI KEPPEL CORPORATION LIMITED BN4.SI OVERSEA-CHINESE BANKING CORP O39.SI WING TAI HLDGS LTD W05.SI SINGTEL Z74.SI

Singapore Stock Alpha Picks: Selectively Emphasising Defensives. Added Sheng Siong.

  • We add Sheng Siong to boost the portfolio’s defensive qualities.



WHAT’S NEW


A mixed March. 



ACTION 


Adding in Sheng Siong for defensiveness. 

  • We add Sheng Siong to our alpha picks as we find its defensive characteristics compelling. The stock has been a laggard over the past year but we expect growth to pick up in 2018 from four new store openings. We also find Sheng Siong’s FY18F dividend yield of 3.6% compelling. 
  • We also reiterate our BUY call on Singtel as the stock has been a laggard (-13.5% over the last 12 months) but displays high defensiveness owing to its geographical diversification, strong cash flows and solid dividend yield.



Sheng Siong – BUY (Nicholas Leow) 


Share Price Catalyst

  • Event: New store wins and uptick in same-store sales growth.
  • Timeline: 3-6 months.


OCBC – BUY (Jonathan Koh) 


Share Price Catalyst

  • Event: Impending IPO for Great Eastern Life Malaysia in 2H18.
  • Timeline: Six months.


DBS – BUY (Jonathan Koh) 


Share Price Catalyst

  • Event: Further rate hikes leading to higher NIMs.
  • Timeline: 3-6 months.


Keppel Corp – BUY (Foo Zhi Wei/Andrew Chow) 


Share Price Catalyst

  • Event: Positive newsflow from contract wins and further de-leveraging from O&G assets.
  • Timeline: 6-12 months.


City Development – BUY (Vikrant Pandey/Loke Pei Hao) 


Share Price Catalyst

  • Event: Upward re-rating of RNAV by consensus on rising asset prices. Positive datapoints on residential property.
  • Timeline: Positive newsflow on Amber Park launch and projects within its vicinity in 2018.


CD REIT – BUY (Vikrant Pandey/Loke Pei Hao) 


Share Price Catalyst

  • Event: Positive datapoints on visitor arrivals, ALOS, ADR, RevPAR and supply pipeline.
  • Timeline: 1H18.


Singtel – BUY (Jonathan Koh) 


Share Price Catalyst

  • Event: Fund flow into laggards and defensive stocks, including Singtel which offers good dividend yield.
  • Timeline: 3-6 months.


Wing Tai – BUY (Vikrant Pandey/Loke Pei Hao) 


Share Price Catalyst

  • Event: Launch of the recently-acquired Serangoon North Avenue 1 site. We also see potential for Wing Tai to buy more landbank given its S$1.6b acquisition headroom.
  • Timeline: Potential 6-9 months for landbank acquisition or launch of its Serangoon North Avenue 1 site.


Citic Envirotech – BUY (Edison Chen/Nicholas Leow) 


Share Price Catalyst

  • Event: Potentially more contract wins and share buybacks by CEL.
  • Timeline: 3-6 months, as clean water is a high priority for the Chinese government. This would benefit the company, which has an impressive track record and technology.







Singapore Research UOB Kay Hian | http://research.uobkayhian.com/ 2018-04-03
UOB Kay Hian SGX Stock Analyst Report BUY Upgrade HOLD 1.10 Up 1.060
BUY Maintain BUY 1.950 Same 1.950
BUY Maintain BUY 1.060 Same 1.060
BUY Maintain BUY 14.030 Same 14.030
BUY Maintain BUY 30.400 Same 30.400
BUY Maintain BUY 9.100 Same 9.100
BUY Maintain BUY 14.950 Same 14.950
BUY Maintain BUY 2.780 Same 2.780
BUY Maintain BUY 4.400 Same 4.400


* Alpha Picks denotes a timeframe of 1-3 months and not UOBKH’s usual 12-month investment horizon for stock recommendation.


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