Singapore Market Focus - DBS Research 2020-07-03: Gradual Recovery Ahead

STI Performance After Polling Days - Singapore Market Focus - DBS Research | SGinvestors.io THAI BEVERAGE PUBLIC CO LTD (SGX:Y92) AEM HOLDINGS LTD (SGX:AWX) KEPPEL DC REIT (SGX:AJBU)

Singapore Market Focus - Gradual Recovery Ahead

  • 2Q was the inflexion point, gradual recovery ahead.
  • COVID resilient stocks holding firm heading to results season.
  • Pullback in ‘Phase 2 beneficiaries’ an opportunity.
  • Travel/tourism stocks will lag ‘Phase 2 beneficiaries’.
  • Yield stocks still in favour.



Election and earnings season in focus

  • Singapore’s General Election (GE) will divert some investor attention away from the stock market with polling day on 10 July. There has been no history of a pre-election rally, but there is positive correlation over a 1-mth period after polling day for STI to track the change in the incumbent’s popular vote. This was 69.9% (average 66.3%) in the 2015 GE. Focus to return to earnings after the GE.


2Q inflexion, recovery gradual.

  • The resurgence of COVID-19 cases in the US and caution ahead of the 2Q results season ended the sharp market rally in June. We see limited downside to STI post the mid-June pullback. Valuation is reasonable at below 12.6x (-0.5SD) 12-mth fwd PE after YTD cuts of 26% and 18% to FY20F and FY21F earnings respectively. Support levels are at 2550 and 2500.
  • Expect a gradual recovery, but worst is likely behind us in 2Q. Attention should return to the phased reopening in coming months.


COVID resilient.



Current pullback in COVID casualties an opportunity



Travel/Tourism lagging “Phase 2 beneficiaries”.

  • While inbound tourism is currently prohibited and outbound tourism greatly discouraged, the reopening of 13 local attractions and the resumption of domestic tours for local customers only is seen as the first step towards the reopening of both inbound and outbound tourism later.
  • Downside for hospitality REITs Ascott Residence Trust (SGX:HMN), Far East Hospitality Trust (SGX:Q5T) and CDL Hospitality Trusts (SGX:J85) as well as airport services provider SATS (SGX:S58) should be limited although recovery for now will continue to lag that of “Phase 2 reopening” beneficiaries.


Still seeking yield.


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Kee Yan YEO CMT DBS Group Research | Janice CHUA DBS Research | https://www.dbsvickers.com/ 2020-07-03
SGX Stock Analyst Report BUY MAINTAIN BUY 0.900 SAME 0.900
BUY MAINTAIN BUY 3.530 SAME 3.530
HOLD MAINTAIN HOLD 2.550 SAME 2.550



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