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)
- Oversold. The stock has retraced 33% from its recent high and is currently trading at 0.7x 2018F P/B and at 8.3x FY18F PE, which is significantly cheaper than peers, including Memtech.
- Expect a better 2Q18 to provide relief. Investors have been shaken by its weak 1Q18 performance, exacerbated by forex losses. We expect a seasonally better 2Q18 and potential forex gains as the US dollar has gained 1.9% vs the Singapore dollar.
- Price currently below major shareholder’s last purchase. Sunningdale is trading at an 18% discount to the last acquisition price of S$1.71 (13m shares) by its chairman Koh Boon Hwee.
- 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
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)
- Solid proxy to recovering oil prices. CSE is a good proxy to recovering oil prices as two- thirds of its existing orderbook of S$175m come from the oil & gas 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 that has high entry barriers. CSE is one of the few qualified system integrators in O&G and communication infrastructure in the region.
- 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, such as Malaysia and Middle East, for CSE.
- 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 continued recovery in earnings.
OCBC – BUY (Jonathan Koh)
- 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 re-invested 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 a pleasant surprise. 1Q18 net profit was 12% above our estimate. Corporate loans contributed to see steady growth and wealth management delivered a stellar performance.
- Optimistic outlook. Management guided loan growth of 8% and is confident of a ROE of 12.5% in 2018. Together with 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 offshore & marine 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 the Singapore residential recovery (40% of GAV), with the largest residential landbank 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 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)
- Our target price is S$1.95, which assumes a terminal growth rate of 2.5%.
- CDREIT’s Singapore hotel 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 respectively (2017: 2,868 new rooms).
- 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 datapoints on visitor arrivals, ALOS, ADR, RevPAR and supply pipeline.
- Timeline: 3-6 months.
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 FY19 due to industry consolidation (Bharti merged with Tata Teleservices’ consumer mobile business).
- Upside in Australia as three nationwide outages by Telstra in May could see Optus gain market share and drive its growth momentum.
- The group is least affected by a fourth mobile operator in Singapore as overseas businesses account for about 70% of its bottom line. Maintain BUY and target price of S$4.22.
- 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 (DPS commitment of 17.5 S cents/share for two years).
- Timeline: 3-6 months.
Wing Tai – BUY (Vikrant Pandey/Loke Pei Hao)
- Maintain BUY and 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 peers in our coverage) and a deep 41% discount to RNAV.
- With net cash of S$54.9m, Wing Tai is well positioned to deploy its sizeable debt headroom of S$1.6b (assuming a 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: 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
2.000
Same
2.000
0.610
Same
0.610
16.500
Same
16.500
35.500
Same
35.500
9.000
Same
9.000
1.950
Same
1.950
14.030
Same
14.030
4.220
Same
4.220
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.
