Singapore Stock Strategy - RHB Invest 2018-06-26: Investment Themes For 2H18

Strategy - Singapore - RHB Securities Research 2018-06-26: Investment Themes For 2h18 HRNETGROUP LIMITED SGX:CHZ APAC REALTY LIMITED SGX:CLN JAPAN FOODS HOLDING LTD. SGX:5OI SILVERLAKE AXIS LTD SGX:5CP

Strategy - Singapore - Investment Themes For 2H18

  • Given the macro backdrop of late cycle investing, our 2H18 investment themes for Singapore include:
    1. Stocks that will be beneficiaries of rising interest rates (SIBOR);
    2. Defensive late cycle plays;
    3. Stocks that have the potential to deliver earnings upsides;
    4. Undervalued, out of favour stocks.



Beneficiary of rising interest rates (Banks: UOB)



Defensive late cycle plays (Consumer: Dairy Farm International, Sheng Siong Group. Industrials: Moya Holdings, ST Engineering)


Top-down sector picks.


Bottom-up stock picks: net cash companies with high yields.



Potential to deliver earnings upsides (CAO, FEH, GSSE, HRNET, SMG)



Out of favour stocks (Telecoms: SingTel)

  • Singapore’s telecoms market, which was locked up for 16 years, has witnessed the arrival of new players and increased competition over last two years. Three mobile virtual network operators (MVNOs) have already launched operations and the fourth telecoms operator is expected to start providing services by end-2018. This has led to increased price competition between the three incumbents – SingTel, Starhub and M1. As a result, all three telcos have witnessed weakness in their respective earnings.
  • While competitive risks remain in Singapore (with the entry of TPG Telecom in 2H18) and across its mobile associates, we see improved risk-reward profile for 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 from a stronger Optus, sustainable dividends, and cost savings/avoidance initiatives totalling SGD500m for FY19. 
  • We believe the guidance of absolute payout of SGD0.175 DPS for the next two FYs (FY19-20) is assuring, as it provides certainty to investors on the sustainability of the payout, and safeguards against further earnings headwinds from its regional mobile associates.




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Shekhar Jaiswal RHB Securities Research | Singapore Research Team RHB Invest | https://www.rhbinvest.com.sg/ 2018-06-26
SGX Stock Analyst Report BUY Maintain BUY 1.180 Same 1.180
BUY Maintain BUY 1.35 Same 1.35
BUY Maintain BUY 0.63 Same 0.63
BUY Maintain BUY 0.650 Same 0.650



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