2H18 Market Strategy - UOB Kay Hian 2018-06-01: Stock Picks For The Rest Of 2018

2H18 Market Strategy - UOB Kay Hian 2018-06-01: Stock Picks For The Rest Of 2018. Singapore Stock Picks for 2018 H2 SG Stock To Buy Now SUNNINGDALE TECH LTD SGX:BHQ CITYNEON HOLDINGS LIMITED SGX:5HJ TIANJIN ZHONG XIN PHARM GROUP SGX:T14 CSE GLOBAL LTD SGX:544 DBS GROUP HOLDINGS LTD SGX:D05 OVERSEA-CHINESE BANKING CORP SGX:O39 KEPPEL CORPORATION LIMITED SGX:BN4 CITY DEVELOPMENTS LIMITED SGX:C09 CAPITALAND COMMERCIAL TRUST SGX:C61U SINGAPORE POST LIMITED SGX:S08 CDL HOSPITALITY TRUSTS SGX:J85 ASCENDAS REAL ESTATE INV TRUST SGX:A17U SINGAPORE TECH ENGINEERING LTD SGX:S63 SINGTEL SGX:Z74

2H18 Market Strategy - Stock Picks For The Rest Of 2018.

  • Singapore Large caps stocks we favour include DBS, OCBC, Keppel Corp, CityDev, CCT, SPOST, CD REIT, A-REIT, STE and SingTel.
  • Mid-cap gems include Sunningdale, Cityneon, CSE and Tianjin ZhongXin.
  • SELL M1.



Balancing blue chips with earnings delivery upside with quality laggards.

  • As valuations have closed in towards the mean, we balance our portfolio with blue chips that could deliver earnings with some upside potential or quality laggards with either strong dividend yields or specific catalysts. This is key in the event of any negative surprises, both from company-specific or macro developments.

Large-Cap Picks

DBS GROUP HOLDINGS LTD (SGX:D05)
DBS (SGX:D05) Share Price  DBS (SGX:D05) Target Price  DBS (SGX:D05) Analyst Reports  DBS (SGX:D05) Corporate Actions  DBS (SGX:D05) Announcements  DBS (SGX:D05) Latest News  DBS (SGX:D05) Blog Articles
Potential earnings surprises from NIM expansion.
OVERSEA-CHINESE BANKING CORP (SGX:O39)
OCBC Bank (SGX:O39) Share Price  OCBC Bank (SGX:O39) Target Price  OCBC Bank (SGX:O39) Analyst Reports  OCBC Bank (SGX:O39) Corporate Actions  OCBC Bank (SGX:O39) Announcements  OCBC Bank (SGX:O39) Latest News  OCBC Bank (SGX:O39) Blog Articles
Unlocking of value through the divestment of 30% stake in Great Eastern Life Assurance (GELM)
CITY DEVELOPMENTS LIMITED (SGX:C09)
City Developments (SGX:C09) Share Price  City Developments (SGX:C09) Target Price  City Developments (SGX:C09) Analyst Reports  City Developments (SGX:C09) Corporate Actions  City Developments (SGX:C09) Announcements  City Developments (SGX:C09) Latest News  City Developments (SGX:C09) Blog Articles
Positive newsflow on sector and consensus upgrades in RNAV.
KEPPEL CORPORATION LIMITED (SGX:BN4)
Keppel Corp (SGX:BN4) Share Price  Keppel Corp (SGX:BN4) Target Price  Keppel Corp (SGX:BN4) Analyst Reports  Keppel Corp (SGX:BN4) Corporate Actions  Keppel Corp (SGX:BN4) Announcements  Keppel Corp (SGX:BN4) Latest News  Keppel Corp (SGX:BN4) Blog Articles
Positive sentiment from recovering oil prices and a cleaner proxy to the offshore sector with multiple growth engines.
SINGAPORE POST LIMITED (SGX:S08)
SingPost (SGX:S08) Share Price  SingPost (SGX:S08) Target Price  SingPost (SGX:S08) Analyst Reports  SingPost (SGX:S08) Corporate Actions  SingPost (SGX:S08) Announcements  SingPost (SGX:S08) Latest News  SingPost (SGX:S08) Blog Articles
Signs of recovery in key segments and beneficiary of rising cross-border e-commerce volumes.
SINGTEL (SGX:Z74)
SingTel (SGX:Z74) Share Price  SingTel (SGX:Z74) Target Price  SingTel (SGX:Z74) Analyst Reports  SingTel (SGX:Z74) Corporate Actions  SingTel (SGX:Z74) Announcements  SingTel (SGX:Z74) Latest News  SingTel (SGX:Z74) Blog Articles
Optus will benefit from outages suffered by Telstra and management promise of 17.5 S cents DPS for two years, implying a dividend yield of at least 5%.
CAPITALAND COMMERCIAL TRUST (SGX:C61U)
Capitaland Commercial Trust (SGX:C61U) Share Price  Capitaland Commercial Trust (SGX:C61U) Target Price  Capitaland Commercial Trust (SGX:C61U) Analyst Reports  Capitaland Commercial Trust (SGX:C61U) Corporate Actions  Capitaland Commercial Trust (SGX:C61U) Announcements  Capitaland Commercial Trust (SGX:C61U)Latest News  Capitaland Commercial Trust (SGX:C61U) Blog Articles
Improving prospects for Singapore office rental growth.
CDL HOSPITALITY TRUSTS (SGX:J85)
CDL Hospitality Trust (SGX:J85) Share Price  CDL Hospitality Trust (SGX:J85) Target Price  CDL Hospitality Trust (SGX:J85) Analyst Reports  CDL Hospitality Trust (SGX:J85) Corporate Actions  CDL Hospitality Trust (SGX:J85) Announcements  CDL Hospitality Trust (SGX:J85)Latest News  CDL Hospitality Trust (SGX:J85) Blog Articles
Buoyant outlook for Singapore hotels on tight supply pipeline and pick-up in corporate demand.
ASCENDAS REAL ESTATE INV TRUST (SGX:A17U)
Ascendas Reit (SGX:A17U) Share Price  Ascendas Reit (SGX:A17U) Target Price  Ascendas Reit (SGX:A17U) Analyst Reports  Ascendas Reit (SGX:A17U) Corporate Actions  Ascendas Reit (SGX:A17U) Announcements  Ascendas Reit (SGX:A17U)Latest News  Ascendas Reit (SGX:A17U) Blog Articles
Signs of stabilisation in Singapore industrial market and upside from accretive overseas acquisitions, especially in Europe.



Mid-Caps Picks.

  • Our mid-cap picks for investors with higher risk tolerance include:

SUNNINGDALE TECH LTD (SGX:BHQ)  Sunningdale Tech (SGX:BHQ) Share Price  Sunningdale Tech (SGX:BHQ) Target Price  Sunningdale Tech (SGX:BHQ) Analyst Reports  Sunningdale Tech (SGX:BHQ) Corporate Actions  Sunningdale Tech (SGX:BHQ) Announcements  Sunningdale Tech (SGX:BHQ) Latest News  Sunningdale Tech (SGX:BHQ) Blog Articles

  • The sharp decline in its share price, in our view, has discounted the seasonally weak 1Q18 results, which was exacerbated by forex losses during the period. At the current price, the stock is trading at 0.7x FY18F P/B, FY18F PE of 8.3x and a dividend yield of 5.4%.

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

  • The group is a beneficiary of rising oil prices. We see potential synergies from its new partner, Serba Dinamik, which could open up markets in Malaysia and the Middle East for CSE. Operating cash flow is expected to improve in the next 1-2Q as selected projects have hit billing milestones and we forecast CSE will end 2018 at a net cash to equity position of 23%. 
  • The stock also offers sustainable dividend yield of over 6%. We have a PE-based target price of S$0.61.

CITYNEON HOLDINGS LIMITED (SGX:5HJ)  Cityneon (SGX:5HJ) Share Price  Cityneon (SGX:5HJ) Target Price  Cityneon (SGX:5HJ) Analyst Reports  Cityneon (SGX:5HJ) Corporate Actions  Cityneon (SGX:5HJ) Announcements  Cityneon (SGX:5HJ) Latest News  Cityneon (SGX:5HJ) Blog Articles

  • We have a BUY with a PE-based target price of S$1.55. The group’s accretive acquisition of JP Exhibition (JPE), which holds the intellectual property (IP) rights for the Jurassic Park Exhibition, is expected to help drive net profit growth of 42% y-o-y in FY18. 
  • Looking ahead, due to the high number of visitors to JPE, management may consider a change in its business model to capture the upside from JPE. The stock is currently trading at a bargain FY18F PE of 10.8x compared to peer valuation of 15.4x.

TIANJIN ZHONG XIN PHARM GROUP (SGX:T14)  Tianjin Zhongxin Pharmaceutical (SGX:T14) Share Price  Tianjin Zhongxin Pharmaceutical (SGX:T14) Target Price  Tianjin Zhongxin Pharmaceutical (SGX:T14) Analyst Reports  Tianjin Zhongxin Pharmaceutical (SGX:T14) Corporate Actions  Tianjin Zhongxin Pharmaceutical (SGX:T14) Announcements  Tianjin Zhongxin Pharmaceutical (SGX:T14) Latest News  Tianjin Zhongxin Pharmaceutical (SGX:T14) Blog Articles

  • The stock is trading at a huge discount to its A-shares and is on the cusp of a multi-year strong growth outlook, underpinned by expected sales of Tong Mai Yang Xin Pill of Rmb500m by 2020, new sales growth channels as well as management plans to rejuvenate its sales force. 
  • Our PE-based target price of S$1.72 implies an upside of more than 40%.





Sector Weighting.


The banking sector remains an OVERWEIGHT, despite its outperformance. 

  • Rising interest rates should benefit banks, particularly DBS, which has a strong deposit franchise in Singapore. 
  • While we are cognisant that banks, particularly DBS, are a crowded trade, we suspect DBS’ potential earnings surprise and its P/B valuation, which is still below +1SD, suggest that there is still decent upside.

We are OVERWEIGHT property developers and S-REITs.

  • Residential property demand is expected to remain firm, underpinned by replacement demand from en-blocers and a pick- up in home buying interest from foreigners. We expect Singapore property prices to rise 10% this year. A potential catalyst could be rising RNAVs by consensus. Our top picks are CityDev, CES, Wing Tai and CapitaLand.
  • In the S-REITs space, we see a supply-led recovery and a demand pick-up in segments such as hospitality and office. We favour CCT, CD REIT and Ascendas REIT (A-REIT).

We are neutral on shipyards.

  • We are neutral on shipyards but see potential trading opportunities on improving sentiment as oil prices recover and positive newsflow emerges. However, O&M earnings recovery could be delayed to 2019-20 as shipyards work through orders that were secured in 2016- 17 at lower margins. 
  • Our preferred picks are Keppel Corp and Sembcorp Industries (SCI).

Aviation has been raised to OVERWEIGHT.

  • Aviation has been raised to OVERWEIGHT as a result of our BUY calls on ST Engineering (STE) and SIA Engineering. STE looks compelling given its strong cash flows, recent contract wins and global expansion into exciting areas such as smart city applications. We forecast 2019-20 EPS growth of 8-13% respectively and its sustainable dividend yield of more than 4% to be compelling.





Also Read:

Stock Strategy Singapore - Treading Carefully After Market Run

Stock Strategy Singapore - Investment Theme For The Rest of 2018




Andrew CHOW CFA UOB Kay Hian | https://research.uobkayhian.com/ 2018-06-01
SGX Stock Analyst Report BUY Maintain BUY 2.000 Same 2.000
BUY Maintain BUY 1.550 Same 1.550
BUY Maintain BUY 1.720 Same 1.720
BUY Maintain BUY 0.610 Same 0.610
BUY Maintain BUY 35.500 Same 35.500
BUY Maintain BUY 16.500 Same 16.500
BUY Maintain BUY 9.000 Same 9.000
BUY Maintain BUY 14.030 Same 14.030
BUY Maintain BUY 2.090 Same 2.090
SGX Stock Analyst Report BUY Maintain BUY 1.590 Same 1.590
BUY Maintain BUY 1.950 Same 1.950
BUY Maintain BUY 3.050 Same 3.050
BUY Maintain BUY 4.100 Same 4.100
BUY Maintain BUY 4.220 Same 4.220



Advertisement



MOST TALKED ABOUT STOCKS / REITS OF THE WEEK



loading.......



ANALYSTS SAY


loading.......