FSSTI Constituents
Straits Times Index
SINGTEL
SGX:Z74
KEPPEL CORPORATION LIMITED
SGX:BN4
OVERSEA-CHINESE BANKING CORP
SGX:O39
CITY DEVELOPMENTS LIMITED
SGX:C09
Stock Strategy Singapore - Switch Out Of Outperformers For Alpha
- We assess the outperformers and underperformers within the FSSTI, with the recent peak from 2 May as a reference.
- While we believe downside momentum is likely to continue, we recommend investors to tactically switch out of the top three outperformers to the likes of Singtel, Keppel Corp, OCBC and CityDev.
WHAT’S NEW
We analyse the relative performance of the FSSTI index constituents.
- We rank the performance of the FSSTI index stocks, commencing from recent peaks on 2 May, when the FSSTI peaked at 3,615.
- The index has declined by 11% YTD, but 15 out of the 30 stocks have declined by more than 11%.
ACTION
Brace for more selling pressure.
- As at yesterday’s close, the FSSTI had broken below an uptrend line from 2016’s lows and is sitting close to a 100-day moving average of 3,220. We believe downside momentum is likely to accelerate over the next few weeks.
- In the worst case, we believe the FSSTI could head down towards the 3,100 level, which approximates the 50% retracement of the rally from 2016’s lows. At that level, the FSSTI would then be trading at a PE of 12.3x (close to -1SD) and an attractive P/B of 1.08x.
Switch out of outperformers to underperformers.
- As downside momentum accelerates, we recommend investors to gradually switch out of the outperformers into the underperformers. 15 out of the 30 index stocks had underperformed the FSSTI during the same period.
- Conversely, Jardine Matheson and Genting Singapore have not only beaten the market but are also maintaining a positive lead. We recommend investors to tactically switch out of these two stocks and ComfortDelGro into either
- Singtel (Rating: BUY; Target Price: S$4.22),
- OCBC (Rating: BUY; Target Price: S$14.28),
- City Developments (Rating: BUY; Target Price: $14.03) or
- Keppel Corp (Rating: BUY; Target Price: S$9.00)
- ComfortDelGro outperformed the FSSTI by 10.4ppt. Given the limited upside to our target price and the stock's outperformance, investors may consider a tactical switch out of ComfortDelGro. While the exit of UBER is positive to the taxi operating environment in Singapore, there remains uncertainties in terms of competition owing to the lack of entry barriers.
- 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 remains a key proxy to the firm residential property market in Singapore (3,181 attributable residential units in Singapore), which accounts for 33% of its GAV. The group will also benefit from the continued improvement in outlook for Singapore's office market. We have a BUY call on City Developments with a RNAV-based target price of S$14.03.
- 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 underperformed the FSSTI by 3.7ppt. Keppel Corp is our preferred proxy to the gradual recovery in oil prices given its strong balance sheet. The property division accounts for close to 70% of our S$9.00 valuation for Keppel. At the current price, Keppel’s O&M segment (S$0.58 bvps at 1.0x 2019F P/B) is valued a zero.
- OVERSEA-CHINESE BANKING CORP (SGX:O39) OCBC Bank (SGX:O39) Share Price OCBC Bank (SGX:O39) Target Price OCBC Bank (SGX:O39) Analyst Reports OCBC Bank (SGX:O39) Corporate Actions OCBC Bank (SGX:O39) Announcements OCBC Bank (SGX:O39) Latest News OCBC Bank (SGX:O39) Blog Articles has underperformed the FSSTI by 7ppt. The planned divestment of a 30% stake in Great Eastern Life Malaysia (GELM) and 33.3% in Hong Kong Life Insurance would increase OCBC’s CET-1 CAR by 0.3ppt while the implementation of internal ratings- based approach (IRBA) at OCBC Wing Hang would increase CET-1 CAR by 0.6ppt. Re- instating the script dividend scheme would ensure that a greater portion of earnings is retained to support future growth, while concurrently rewarding shareholders with a higher dividend payout. We estimate a base case DPS scenario of 44 S cents, representing a dividend yield of 3.8%.
- SINGTEL (SGX:Z74) SingTel (SGX:Z74) Share Price SingTel (SGX:Z74) Target Price SingTel (SGX:Z74) Analyst Reports SingTel (SGX:Z74) Corporate Actions SingTel (SGX:Z74) Announcements SingTel (SGX:Z74) Latest News SingTel (SGX:Z74) Blog Articles - The stock has been sold down but we see potential support from management commitment of a DPS of 17.5 S cents, which would imply a FY19F dividend yield of 5.7% In addition, Optus could gain market share in Australia and TPG Telecom's commercial launch could be blunted by the lack of traditional voice services. FY19 revenue is expected to grow in the low-single digits and EBITDA is expected to be stable whereas free cash flow (FCF) is expected to improve from a lower capex.
Relative Performance of FSSTI Stocks From Recent Peak
| Company | Price @ 02-Jul-18 (S$) |
Price Chg since 02-May-18 (%) |
Rec | Target Price *(S$) |
Upside (%) |
|---|---|---|---|---|---|
| Genting Singapore | 1.21 | 2.5 | BUY | 1.38 | 14.0 |
| ComfortDelGro | 2.26 | 0.0 | BUY | 2.43 | 7.5 |
| Ascendas REIT | 2.61 | -2.6 | BUY | 3.05 | 16.9 |
| HongKong Land | 7.13 | -3.0 | NR | 8.55 | 19.9 |
| Jardine Strategic | 36.65 | -3.4 | NR | 42.67 | 16.4 |
| SPH | 2.59 | -4.1 | HOLD | 2.46 | -5.0 |
| Capitaland Mall | 2.02 | -4.3 | HOLD | 2.13 | 5.4 |
| Singapore Airlines | 10.42 | -6.4 | HOLD | 11.90 | 14.2 |
| ST Engrg | 3.27 | -6.6 | BUY | 4.10 | 25.4 |
| SGX | 7.14 | -7.3 | NR | 8.14 | 14.0 |
| Wilmar Int’l | 3.04 | -7.3 | BUY | 3.90 | 28.3 |
| Venture Corp Ltd | 17.66 | -9.1 | BUY | 25.00 | 41.6 |
| Jardine C&C | 30.77 | -9.6 | NR | 44.13 | 43.4 |
| CapitaLand Commercial | 1.63 | -9.9 | BUY | 2.11 | 29.4 |
| FSSTI | 3238.94 | -10.4 | |||
| UOB | 26.63 | -11.2 | NR | n.a. | n.a. |
| Sembcorp Industries | 2.72 | -11.4 | BUY | 3.60 | 32.4 |
| SATS | 4.91 | -12.3 | BUY | 5.70 | 16.1 |
| Singapore Telecom | 3.05 | -12.9 | BUY | 4.22 | 38.4 |
| City Development | 10.88 | -13.3 | BUY | 14.03 | 29.0 |
| UOL Group Ltd | 7.5 | -13.5 | NR | n.a. | n.a. |
| DBS Group Hldgs | 26.38 | -13.8 | BUY | 30.15 | 14.3 |
| Keppel Corp Ltd | 7.01 | -14.0 | BUY | 9.00 | 28.4 |
| Golden Agri-Reso | 0.305 | -14.1 | SELL | 0.26 | -14.8 |
| Capitaland Ltd | 3.14 | -16.5 | BUY | 4.30 | 36.9 |
| OCBC | 11.51 | -17.6 | BUY | 14.28 | 24.1 |
| Thai Beverage | 0.7 | -17.6 | HOLD | 0.99 | 41.4 |
| Hutchison Port | 0.28 | -18.8 | NR | 0.34 | 22.1 |
| Yangzijiang Ship | 0.885 | -28.0 | BUY | 1.30 | 46.9 |
| Starhub Ltd | 1.64 | -28.1 | HOLD | 1.98 | 20.7 |
Singapore Research
UOB Kay Hian
|
https://research.uobkayhian.com/
2018-07-03
SGX Stock
Analyst Report
4.220
Same
4.220
9.000
Same
9.000
14.280
Same
14.280
14.030
Same
14.030
