Market Focus - DBS Research 2020-01-24: Catching The Wuhan Bug

Regional Market Focus Catching The Wuhan Bug - DBS Research | SGinvestors.io CDL HOSPITALITY TRUSTS (SGX:J85) SINGAPORE AIRLINES LTD (SGX:C6L) SATS LTD. (SGX:S58) RIVERSTONE HOLDINGS LIMITED (SGX:AP4) TOP GLOVE CORPORATION BHD (SGX:BVA)

Market Focus - Catching The Wuhan Bug

  • Current outbreak appears less virulent compared to SARS; how China contains the virus during CNY period is key.
  • Potential sector beneficiaries – Groceries, hospitals, pharmaceuticals, gloves, telco, e-commerce.
  • Potential sector losers – Hospitality/Hotel, airlines/airport services, F&B, Wuhan production facilities.



Headline news to worsen

  • The spread of the Wuhan pneumonia (WHP) outbreak that has gripped Asia is set to worsen amid the most massive annual human migration that takes place during the Lunar New Year period. The number currently infected with WHP stands at 581 (98% from China) across 8 countries with 17 fatalities.
  • With Chinese nationals estimated to make a total of 3bn trips during the CNY period, the fear is that the outbreak will degenerate into a global pandemic as infection rate surges further, and the virus spreads to more countries as Chinese citizens return to work after the holiday period.


Wuhan pneumonia vs SARS

  • While how the outbreak unfolds from here is uncertain, we see early signs that the current Wuhan pneumonia virus may be better contained compared to SARS. Initial data suggests that Wuhan pneumonia is less virulent with a lower fatality rate of about 3% (9.6% for SARS) and lower disease spread among healthcare workers at 2.9% (21.1% for SARS). The virus also appears to be less lethal to the young as all the current fatalities are aged above 48. Healthcare authorities are also better prepared, and the public is more vigilant.
  • Most importantly, the Chinese authorities have taken the unprecedented measure of shutting down travel out of Wuhan, Huanggang and Ezhou,. We believe how China contains the spread of Wuhan pneumonia during/after the crucial Lunar New Year period is key.
  • Back in SARS, stock markets bottomed in Mar03, merely 1 month after China notified WHO. The timing coincided with the start of Operation Iraqi Freedom.


Potential sector beneficiaries



Potential sector losers


See attached PDF report for complete analysis.






Kee Yan YEO CMT DBS Group Research | Janice CHUA DBS Research | https://www.dbsvickers.com/ 2020-01-24
SGX Stock Analyst Report BUY MAINTAIN BUY 1.800 SAME 1.800
BUY MAINTAIN BUY 10.400 SAME 10.400
HOLD MAINTAIN HOLD 5.060 SAME 5.060
BUY MAINTAIN BUY 1.160 SAME 1.160
HOLD MAINTAIN HOLD 1.390 SAME 1.390



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