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
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
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