Singapore Stock Alpha Picks (Aug 2018) - UOB Kay Hian 2018-08-01: A Better July

Singapore Stock Alpha Picks - UOB Kay Hian Research 2018-08-01: A Better July 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.



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)

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)


Share Price Catalyst

  • Event: Further rate hikes leading to higher NIMs.
  • Timeline: 3-6 months.


CD REIT – BUY (Andrew Chow/Loke Pei Hao)


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)


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)


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)


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 | https://research.uobkayhian.com/ 2018-08-01
SGX Stock Analyst Report BUY Maintain BUY 3.900 Same 3.900
BUY Maintain BUY 1.950 Same 1.950
BUY Maintain BUY 0.610 Same 0.610
BUY Maintain BUY 28.950 Same 28.950
BUY Maintain BUY 2.000 Same 2.000



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