Singapore Stock Alpha Picks
Stocks To Watch May 2018
CSE GLOBAL LTD
SGX: 544
OVERSEA-CHINESE BANKING CORP
SGX: O39
DBS GROUP HOLDINGS LTD
SGX: D05
CITIC ENVIROTECH LTD.
SGX: CEE
WING TAI HLDGS LTD
SGX: W05
SINGTEL
SGX: Z74
CDL HOSPITALITY TRUSTS
SGX: J85
CITY DEVELOPMENTS LIMITED
SGX: C09
KEPPEL CORPORATION LIMITED
SGX: BN4
Singapore Stock Alpha Picks - Solid Performance In April; Taking Profit On Sheng Siong & Adding CSE Global.
WHAT’S NEW
- A good month. Our portfolio performed well in April, with most stocks (with the exception of developers) notching up gains. Most notables were the banks, which delivered 8-12% gains in April (OCBC +8% and DBS +12%).
- Sheng Siong, which was added in early-April, also delivered a strong 10% return.
ACTION
Adding newly-initiated CSE and removing Sheng Siong.
- We take profit on Sheng Siong given its strong 10% return in April, which resulted in a downgrade in our rating to HOLD. In its place, we add in newly-initiated CSE, which looks like an excellent proxy to recovering oil prices with a sustainable dividend yield of 6.7%.
CSE Global – BUY (Nicholas Leow/Edison Chen)
- We initiated coverage on CSE Global with a BUY and PE-based target price of S$0.58/share. This is based on a peer average PE of 15x, which suggests an upside of 41% for CSE.
- Solid proxy to recovering oil prices. CSE is a good proxy to the recovering oil prices as two-thirds of its existing orderbook of S$175m is derived from the O&G sector. In addition, the stock offers a sustainable dividend yield of more than 6%.
- High entry barriers. The group has a 32 year track record in a business with high entry barriers. CSE is one of the few qualified system integrators in the region for O&S and communication infrastructure industries.
- Potential synergies from new shareholder. Serba Dinamik, a Malaysia-listed company, recently bought a 25% stake in CSE at S$0.45/share. We see potential synergies as it could open up new markets for CSE such as Malaysia and the Middle East.
- CSE GLOBAL LTD (SGX:544) CSE Global (SGX:544) Share Price CSE Global (SGX:544) Target Price CSE Global (SGX:544) Analyst Reports CSE Global (SGX:544) Corporate Actions CSE Global (SGX:544) Announcements CSE Global (SGX:544) Latest News CSE Global (SGX:544) Blog Articles
Share Price Catalyst
- Event: New contract wins and recovery in earnings.
- Timeline: 6-12 months.
OCBC – BUY (Jonathan Koh)
- Significant improvement in CET-1 CAR in 4Q17. OCBC is well capitalised with a fully loaded CET-1 CAR improving 1.1ppt q-o-q to 13.1% in 4Q17 due to the implementation of internal ratings-based approach (IRBA) for Bank of Singapore and reduced deduction to capital for Great Eastern.
- IPO for Great Eastern Life Malaysia a key catalyst. Management will evaluate the divestment of a 30% stake in Great Eastern Life Malaysia through an IPO or trade sale. Great Eastern has to submit its plan to Bank Negara by Jun 18 and execute the plan likely in 2H18. Proceeds from the divestment could be reinvested to further propel growth in its core commercial banking business.
- OVERSEA-CHINESE BANKING CORP (O39.SI) OCBC Bank Share Price OCBC Bank Target Price OCBC Bank Analyst Reports OCBC Bank Corporate Actions OCBC Bank Announcements OCBC Bank Latest News OCBC Bank Blog Articles
Share Price Catalyst
- Event: Impending IPO for Great Eastern Life Malaysia in 2H18.
- Timeline: 6 months.
DBS – BUY (Jonathan Koh)
- Strong execution as 1Q18 pleasantly surprised. 1Q18 results were 12% ahead of our estimate as the group executed well. Corporate loans contributed steady growth whereas wealth management delivered a stellar performance. As a result, we have raised our target price to S$35.50 (from S$31.08 previously).
- Optimistic outlook. Management guided for loans growth of 8% in 2018 and is confident of a ROE of 12.5% in 2018. Together with its generous dividends (dividend yield of over 3%), DBS remains a core holding as a growth proxy.
- DBS GROUP HOLDINGS LTD (D05.SI) DBS Share Price DBS Target Price DBS Analyst Reports DBS Corporate Actions DBS Announcements DBS Latest News DBS Blog Articles
Share Price Catalyst
- Event: Further rate hikes leading to higher NIMs.
- Timeline: 3-6 months.
Keppel Corp – BUY (Foo Zhi Wei/Andrew Chow)
- Infrastructure and investments are expected to drive growth in the next few quarters. Recurring profits will be underpinned by rising AUM at Keppel Capital.
- Keppel is the cleanest proxy to the O&M recovery, with solid financials (2018F net gearing of 55%)
- KEPPEL CORPORATION LIMITED (BN4.SI) Keppel Corp Share Price Keppel Corp Target Price Keppel Corp Analyst Reports Keppel Corp Corporate Actions Keppel Corp Announcements Keppel Corp Latest News Keppel Corp Blog Articles
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)
- Proxy to ride on the Singapore residential recovery (40% of GAV), with the largest residential land bank of more than 2,090 attributable units.
- CITY DEVELOPMENTS LIMITED (C09.SI) City Developments Share Price City Developments Target Price City Developments Analyst Reports City Developments Corporate Actions City Developments Announcements City Developments Latest News City Developments Blog Articles
Share Price Catalyst
- Event: Upward re-rating of RNAV by consensus on rising asset prices. Positive data points 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)
- We have a target price of S$1.95 (no change), which assumes a terminal growth rate of 2.5%.
- CDREIT’s Singapore hotels could benefit from:
- a recovery in corporate travel,
- Chinese visitor growth, and
- tight supply pipeline.
- Hotel room supply is limited beyond 2017, with only 769, 1,664 and 392 rooms coming on stream in 2018, 2019 and 2020 (compared to 2,868 new rooms in 2017).
- Its Singapore hotels saw a 1.2% y-o-y increase in ADR to S$186 in 4Q17, despite a 0.1ppt drop in occupancy, resulting in 1.1% increase in Singapore RevPAR.
- CDL HOSPITALITY TRUSTS (J85.SI) CDL Hospitality Trust Share Price CDL Hospitality Trust Target Price CDL Hospitality Trust Analyst Reports CDL Hospitality Trust Corporate Actions CDL Hospitality Trust Announcements CDL Hospitality TrustLatest News CDL Hospitality Trust Blog Articles
Share Price Catalyst
- Event: Positive data points on visitor arrivals, ALOS, ADR, RevPAR and supply pipeline.
- Timeline: 1H18.
Singtel – BUY (Jonathan Koh)
- Telkomsel continues to maintain double-digit growth in subscriber base and revenue growth from voice and data. Bharti should start to recover in 2019 due to industry consolidation (Bharti merged with Tata Teleservices’ consumer mobile business).
- The group is least affected by a fourth mobile operator in Singapore as overseas businesses account for about 70% of its bottom-line. BUY with DCF-based target price of S$4.35 (6.25% required rate of return and 1.5% terminal growth).
- SINGTEL (Z74.SI) SingTel Share Price SingTel Target Price SingTel Analyst Reports SingTel Corporate Actions SingTel Announcements SingTel Latest News SingTel Blog Articles
Share Price Catalyst
- Event: Fund flow into laggards and defensive stocks, including Singtel which offers a good dividend yield.
- Timeline: 3-6 months.
Wing Tai – BUY (Vikrant Pandey/Loke Pei Hao)
- BUY with RNAV-based target price of S$2.78, pegged at a 20% discount to RNAV of S$3.48/share. Wing Tai is trading at 0.52x 2018F P/B (lowest within our coverage) and a deep 41% discount to RNAV.
- With a net cash of S$54.9m, Wing Tai is well positioned to deploy its sizeable debt headroom of S$1.6b (assuming comfortable net gearing level of 50%). We believe Wing Tai will further deepen its footprint in Singapore, Malaysia (post privatisation completion) and Australia.
- WING TAI HLDGS LTD (W05.SI) Wing Tai Share Price Wing Tai Target Price Wing Tai Analyst Reports Wing Tai Corporate Actions Wing Tai Announcements Wing Tai Latest News Wing Tai Blog Articles
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: Potentially 6-9 months for landbank acquisition or launch of its Serangoon North Avenue 1 site.
Citic Envirotech – BUY (Edison Chen/Nicholas Leow)
- Solid 1Q18 results with a 145% y-o-y surge in net profits. Recurring water treatment revenue continued to grow 23% y-o-y to S$46m.
- Placement of 83.2m new shares at a 14.8% premium reaffirms our view that Citic looks undervalued.
- Contract wins of Rmb4.2b should provide investors with more assurance over its medium-term prospects and provide earnings visibility.
- CITIC ENVIROTECH LTD. (CEE.SI) Citic Envirotech Share Price Citic Envirotech Target Price Citic Envirotech Analyst Reports Citic Envirotech Corporate Actions Citic Envirotech Announcements Citic Envirotech Latest News Citic Envirotech Blog Articles
Share Price Catalyst
- Event: Potentially more contract wins and share buybacks by CEL.
- he Chinese government. This would benefit the company, which has an impressive track record and technology.
Singapore Research
UOB Kay Hian
|
https://research.uobkayhian.com/
2018-05-03
SGX Stock
Analyst Report
0.580
Same
0.580
16.020
Same
16.020
35.50
Same
35.50
1.060
Same
1.060
* Alpha Picks denotes a timeframe of 1-3 months and not UOBKH’s usual 12-month investment horizon for stock recommendation.
