WILMAR INTERNATIONAL LIMITED
SGX:F34
Singapore Stock Alpha Picks
Stocks To Watch in 2018
CSE GLOBAL LTD
SGX:544
SUNNINGDALE TECH LTD
SGX:BHQ
DBS GROUP HOLDINGS LTD
SGX:D05
OVERSEA-CHINESE BANKING CORP
SGX:O39
SINGTEL
SGX:Z74
CDL HOSPITALITY TRUSTS
SGX:J85
Singapore Stock Alpha Picks - A Better July
- Our portfolio enjoyed a pick-up in performance after a challenging June. We lean towards large caps, and stocks with reasonable dividend yields or near-term catalysts.
- Conversely, developers have been removed owing to a lack of catalysts and weaker take-up rates after the recent property cooling measures.
WHAT’S NEW
A better July showing.
- Our portfolio delivered a good rebound in July with the alpha picks rising 3.2-7.0% during the month. The only exception was City Developments (- 8.4% m-o-m) and banks (by up to -0.6% m-o-m), which declined on property cooling measures announced on 5 July and external uncertainties respectively.
ACTION
Adjusting our portfolio to reflect recent developments.
- We remove City Developments and Wing Tai from our portfolio despite our view that these stocks look undervalued and financials are strong. Key is the lack of catalysts after the recent property cooling measures, which is expected to impact home buying sentiment and positive newsflow in the near term.
Wilmar – BUY (Leow Huey Chuen/Ooi Mong Huey)
- Share price correction. The stock has declined 5.4% from its recent high and is currently trading at 11.6x 2018F PE, which is lower than its 5-year mean of 13.6x PE.
- 2Q18 will be an unusually good quarter for Wilmar. We are expecting a core net profit of around US$260m-290m. This would make 2Q18 the best 2Q for Wilmar. Key trends to look out for are better contribution from the sugar division due to higher milling sales volume, better oilseeds & grains PBT margins, and contribution from tropical oil is expected to be better in 2Q18 on the back of higher sales volume and contribution from biodiesel.
Share Price Catalyst
- Event: Expect unusually good 2Q18 earnings, M&A newsflow.
- Timeline: 1-3 months.
~ SGinvestors.io ~ Where SG investors share
OCBC – BUY (Jonathan Koh)
- We estimate that implementation of internal ratings-based approach (IRBA) to compute risk-weighted assets for OCBC Wing Hang in 2019 would improve CET-1 CAR by 0.6ppt. The group may also evaluate reinstating scrip dividend scheme as a tool for capital management to support a higher dividend payout ratio.
- 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: Rising interest rates could help underpin NIMs.
- The divestment of a 33.3% stake in Hong Kong Life Insurance for HK$2,366.7m (S$425.9m) is waiting for regulatory clearance and should be completed by end-18.
- Timeline: 6-9 months
DBS – BUY (Jonathan Koh)
- Management confident of achieving ROE of 12.5% for 2018. DBS is a prime beneficiary of rising SIBOR and SOR due to stable Singapore dollar CASA ratio at 91.5%. It has also strengthened deposit franchise in Hong Kong with Hong Kong dollar CASA ratio improving 6.2ppt y-o-y to 58.4% in 1Q18..
- Management guided for loans growth of 8% in 2018. Together with its generous dividends (dividend yield of 4.5%), 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.
CD REIT – BUY (Andrew Chow/Loke Pei Hao)
- We have a target price of S$1.86, which assumes a terminal growth rate of 2.5% and risk-free rate of 2.75%.
- CDREIT’s Singapore hotel segment could benefit from:
- a recovery in corporate travel,
- b) 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 (compared with 2,868 new rooms in 2017).
- Even with the new land for hotels included under the 2H18 Government Land Sales (GLS), new supply (potentially 930 rooms) will only come on-stream after 2020, which suggests tight near-term supply.
- 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 data points on visitor arrivals, average length of stay (ALOS), average daily room rate (ADR), RevPAR and supply pipeline. Positive results from new operator and repositioning of its Maldives Hotel.
- Timeline: 6-12 months.
Singtel – BUY (Jonathan Koh)
- Optus is gaining market share in Australia and TPG Telecom’s commercial launch could be blunted by the lack of traditional voice services.
- The group is least affected by a fourth mobile operator in Singapore as overseas businesses account for about 70% of its bottom-line. BUY with a 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: Funds flow into laggards and defensive stocks, including Singtel which offers a good dividend yield (DPS commitment of 17.5 S cents/share for 2 years).
- Timeline: 3-6 months.
Sunningdale – BUY (Yeo Hai Wei)
- Opportunity after correction. The stock has retraced 34% from its recent high and is currently trading at 0.7x P/B and at 8.2x 2018F PE, which is significantly cheaper than its peers, including Memtech.
- Hoping for a better 2Q18 to provide relief. Investors have been shaken by a weak 1Q18, exacerbated by forex losses. We see the potential for a forex gain in 2Q18 as the US dollar has gained 3.9% q-o-q vs the Singapore dollar, as well as potential gains in 2H18 from the sale of a non-core factory in China.
- Price currently below major shareholder’s last purchase. After the price retracement, Sunningdale is trading at a 20% 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 (including forex gain) and gains from disposal of its non-core asset in 2HFY18.
- Timeline: 3-9 months
CSE Global – BUY (Yeo Hai Wei)
- Solid proxy on recovering oil prices. CSE is a good proxy of recovering oil prices as two-thirds of its existing orderbook of S$175m comes from the O&G sector. In addition, the stock offers sustainable dividend yield of more than 6%.
- High entry barriers. The group has a 32-year track record in a business with high entry barriers. CSE is one of the few qualified system integrators in the region for O&G and communication infrastructure industries.
- Potential synergies from new shareholder. Serba Dinamik, a Malaysian-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 for CSE such as Malaysia and Middle East.
- 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. Newsflow of positive ts new shareholder Serba Dinamik.
Singapore Research
UOB Kay Hian Research
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https://research.uobkayhian.com/
2018-08-01
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