FSSTI Index Constituents Strategy - UOB Kay Hian 2018-07-03: Switch Out Of Outperformers For Alpha

Singapore Strategy - UOB Kay Hian 2018-07-03: Switch Out Of Outperformers For Alpha 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.



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 BUY Maintain BUY 4.220 Same 4.220
BUY Maintain BUY 9.000 Same 9.000
BUY Maintain BUY 14.280 Same 14.280
BUY Maintain BUY 14.030 Same 14.030



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