Singapore Stock Alpha Picks (June 2018) - UOB Kay Hian 2018-06-05: A Challenging May; Tweaks Portfolio On Moderate Upside For Market

Singapore Stock Alpha Picks - UOB Kay Hian 2018-06-05: A Challenging May; Tweaks Portfolio On Moderate Upside For Market Singapore Stock Alpha Picks Stocks To Watch in 2018 SUNNINGDALE TECH LTD SGX:BHQ CSE GLOBAL LTD SGX:544 OVERSEA-CHINESE BANKING CORP SGX:O39 DBS GROUP HOLDINGS LTD SGX:D05 KEPPEL CORPORATION LIMITED SGX:BN4 CDL HOSPITALITY TRUSTS SGX:J85 CITY DEVELOPMENTS LIMITED SGX:C09 SINGTEL SGX:Z74 WING TAI HLDGS LTD SGX:W05

Singapore Stock Alpha Picks - A Challenging May; Tweaks Portfolio On Moderate Upside For Market

  • We tweak our Alpha Picks portfolio by adding Sunningdale and removing Citic Envirotech as we focus on stocks that are cash-generative and provide dividend yield to protect downside.



WHAT’S NEW

  • A challenging May. May 2018 proved to be a very difficult period, with the market retracing 5.1% m-o-m and our picks (see Singapore Stock Alpha Picks (May 2018) ) declining 0.5-11.5% m-o-m. The only exception was CSE Global, which delivered a solid 10.8% return after reporting better-than-expected 1Q18 results.


ACTION


Add Sunningdale and remove Citic Envirotech.

  • Sunningdale has been added despite the recent bounce as the stock is still trading at an attractive 0.7x 2018F P/B and a decent 5% dividend yield. 
  • We remove Citic Envirotech despite its disappointing share price performance as we focus our mid-cap picks on stocks that generate cash and provide dividend yield to help protect price downside.


Sunningdale – BUY (Nicholas Leow/Edison Chen)


Share Price Catalyst

  • Event: Recovery in 2QFY18 earnings and gains from disposal of non-core asset.
  • Timeline: 3-6 months.


CSE Global – BUY (Nicholas Leow/Edison Chen)


Share Price Catalyst

  • Event: New contract wins and continued recovery in earnings.


OCBC – BUY (Jonathan Koh)


Share Price Catalyst

  • Event: Impending IPO for Great Eastern Life Malaysia in 2H18.
  • Timeline: 6 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 prices and new launches.
  • 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: 3-6 months.


Singtel – BUY (Jonathan Koh)


Share Price Catalyst

  • Event: Fund flow into laggards and defensive stocks, including SingTel which offers a good dividend yield (DPS commitment of 17.5 S cents/share for two years).
  • Timeline: 3-6 months.


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


Share Price Catalyst

  • Event: Potential to buy more landbank, given its S$1.6b acquisition headroom.
  • Timeline: 6-9 months for landbank acquisition.








Singapore Research UOB Kay Hian | https://research.uobkayhian.com/ 2018-06-05
SGX Stock Analyst Report BUY Maintain BUY 2.000 Same 2.000
BUY Maintain BUY 0.610 Same 0.610
BUY Maintain BUY 16.500 Same 16.500
BUY Maintain BUY 35.500 Same 35.500
BUY Maintain BUY 9.000 Same 9.000
BUY Maintain BUY 1.950 Same 1.950
BUY Maintain BUY 14.030 Same 14.030
BUY Maintain BUY 4.220 Same 4.220
BUY Maintain BUY 2.780 Same 2.780


* 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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