DBS GROUP HOLDINGS LTD (SGX:D05)
KEPPEL CORPORATION LIMITED (SGX:BN4)
April 2019 Wrap-Up - Singapore In 5 Minutes
- FSSTI closed at 3,400.2 pts in Apr, up 5.8%, on positive China/US data. However, local economic data disappointed.
- Singapore government steps in to boost the economy through Draft Master Plan 2019 and IR2 plans.
- CapitaLand (SGX:C31), City Developments (SGX:C09), ComfortDelGro (SGX:C52), ST Engineering (SGX:S63), DBS Group (SGX:D05), Keppel Corp (SGX:BN4) and CDL Hospitality Trusts (SGX:J85) remain our large-cap top picks, and we replace Genting Singapore (SGX:G13) with UOL Group (SGX:U14).
FSSTI up despite underwhelming local data
- The FSSTI closed at 3,400.2 pts, up 5.8% in April 2019, as China’s 1Q19 GDP stabilised, and as surprisingly strong US 1Q19 GDP figures gave a late-month boost.
- Flash 1Q19 GDP data came in slightly below consensus (1.4%), at 1.3% y-o-y. NODX sank 11.7% y-o-y, in part due to a high base year; however, the decline was broad-based, with Electronics down 26.7% y-o-y and Non-Electronics down 7% y-o-y.
- Both institutional and retail investors were net sellers for the month, selling Telcos and Financials. Institutions also sold REITs and Consumer Discretionary, while retail sold Industrials and Consumer Staples. (see: SGX Market Fund Flow overview and SGX Weekly Market Fund Flow by Sector)
DBS, Keppel Corp and UOB top performers in Apr 2019
- The best performing sectors were Oil & Gas, REITs and Developers, while Healthcare, Industrials and Utilities underperformed.
- The index best performers were DBS Group (SGX:D05), Keppel Corp (SGX:BN4), and United Overseas Bank (UOB, SGX:U11), up more than 10% m-o-m for Apr. (See: Performance of Straits Times Index STI Constituents in April 2019.)
- DBS’s stellar results from trading income had a positive spillover impact on UOB while Keppel Corp’s plan to increase headcount in the O&M sector, positioning for a recovery, excited the market. DBS and Keppel Corp are on our high-conviction list. See Singapore Strategy - CGSCIMB Research Alpha Picks March 2019.
- Dairy Farm International (SGX:D01) declined for the second consecutive month, awaiting clarity on restructuring plan and upcoming results.
- Venture Corp (SGX:V03) fell, despite its relatively good results, as it faces near-term headwinds of both trade tensions and global slowdown, resulting in our recent downgrade to HOLD (from Add, see report: Venture Corporation - CGS-CIMB Research 2019-04-26: Near-Term Growth Is Priced In).
- We also downgraded Sheng Siong Group (SGX:OV8) to HOLD as Sheng Siong's share price could be capped by gestation costs in the short term. See report: Sheng Siong Group - CGS-CIMB Research 2019-04-29: 1Q19 On A Grocery Break.
Boost from Draft Master Plan 2019 and IR2 plans
- We expect the CBD Incentive Scheme and the committed investment of S$9bn to expand and refresh the two integrated resorts, to give the economy an initial boost through the construction and banking industries, and eventually spill over to tourism, hospitality and services. See our full report: Singapore Strategy - Age-defying boost published on 5 April).
Key news – mega deals in property sector and STE
- There were several sizeable M&As in the property/ REITs sectors including
- the merger of OUE Commercial REIT (SGX:TS0U) and OUE Hospitality Trust (SGX:SK7) with portfolio valued at S$6.8bn,
- Oxley Holdings (SGX:5UX)’s divestment in Chevron House for up to S$1.03bn,
- Perennial Real Estate Holdings (SGX:40S)/ Singapore Press Holdings (SGX:T39)’s divestment of Chinatown Point Mall for S$520m,
- United Industrial Corp (SGX:U06)’s 24.27% stake acquisition of Marina Centre Holding for c.S$485m and
- Singapore Press Holdings (SGX:T39)’s £133.7 million (S$236.5 million) addition of UK student accommodation portfolio across 20 assets in 10 cities.
- ST Engineering (SGX:S63) achieved a record quarter with its announcement of S5bn worth of contracts (including options) among aerospace (S$1.3bn), electronics (S$818m) and marine (S$2.6bn).
Technical perspective: expect near-term correction
- STI breached above the 3,350 key resistance in mid-April and hit above the 3,400 psychological level. However, with the rising bullish momentum, the Daily Relative Strength Index (RSI) has also entered into an extreme overbought condition.
- The RSI hit a high of 78 on 29 April as the STI formed an intraday high of 3,415 points. The last extreme overbought condition occurred in April 2015 followed by a period of correction in the next month with STI falling by c.6%. Hence, we expect a near-term correction to 3,200-3,270 with 3,400 as a psychological round number capping the immediate upside.
- A bearish close back below the 3,350 pivot point could turn the sentiment negative.
LIM Siew Khee
CGS-CIMB Research
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https://research.itradecimb.com/
2019-05-02
SGX Stock
Analyst Report
30.00
SAME
30.00
8.410
SAME
8.410
