Singapore Market Focus - DBS Research 2020-10-13: Awakening From September Slumber

Singapore Market Focus - DBS Research | SGinvestors.io AEM HOLDINGS LTD (SGX:AWX) UMS HOLDINGS LIMITED (SGX:558) THAI BEVERAGE PUBLIC CO LTD (SGX:Y92) CHINA AVIATION OIL(S) CORP LTD (SGX:G92) CAPITALAND MALL TRUST (SGX:C38U)

Singapore Market Focus - Awakening From September Slumber




Mix of earnings, politics and medicine.

  • STI trades at slightly above average PE as the 3Q results season starts. STI 2020 year-end target is lowered to 2750 (from 2850) at 13.8x (+0.5SD) FY21F PE. We maintain that the worst of the earnings cuts has passed. STI likely touched a major low last month at our stated 2440 technical support.
  • Biden’s average poll score has widened to a 9-pt lead vs Trump’s. A Biden victory would lift sentiment for Asian and Singapore’s small/open economy as he pledges to end the trade war with EU and reconsider China tariffs.
  • The outcome of the first Phase 3 COVID-19 vaccine trials could be this month with more to follow in coming months. One or more positive outcomes followed shortly by approval for public use will be a major boost for the crippled travel sector.


Picks for 3Q upcoming results season



Vaccine development

  • Anticipation of vaccine production and the gradual reopening of air space to include general leisure travel going forward bode well for Singapore’s aviation and hospitality sectors. Our picks are SATS (SGX:S58), SIA Engineering (SGX:S59), ST Engineering (SGX:S63), Far East Hospitality Trust (SGX:Q5T), Ascott Residence Trust (SGX:HMN) and CDL Hospitality Trusts (SGX:J85).
  • Until a vaccine becomes widely available, Singapore will look to reopen its air borders without the 14-day stay-home-notice while guarding against inbound COVID-19 risks. This is done by
    1. unilaterally reopening borders to visitors from countries that have controlled COVID-19, and
    2. possible repeated testing, close movement tracking and separation from the community for visitors from countries with higher infection rates.
  • The outcome for most of the 10 COVID-19 vaccine candidates currently under Phase 3 trials will likely be known in the next few months. The first could come as early as this month, starting with the vaccine developed by BioNTech-Ptizer-FosunPharma. If approved, 1.3bn doses can be produced by end-2021 that will inoculate up to 650m people. Other vaccine candidates from the US and China are also looking to reveal the outcome of their Phase 3 trials during end-2020 to early- 2021. Several vaccine makers are looking to produce 500m to > 1bn doses by end-2021.
  • Changi Airport has set up facility to conduct 10,000 (c.20% of Singapore’s average daily visitor arrivals in 2019) daily swab tests, capable of increasing when required.

The path towards New Normal

  • Singapore’s phased reopening is progressing very well with less than five daily community cases for more than a month. Currently in Phase 2, the government will be progressively revealing more information about the transition into Phase 3 soon.
  • Among the changes –
    1. Allow MICE events up to 250 attendees,
    2. more details on increasing the 5-person cap for group gatherings will be released,
    3. increase in group size limits for key life events such as weddings and religious activities to 100 people,
    4. 50% of workplace employees can now return to office, and
    5. Cruise-to-nowhere to start from November.
  • Beneficiaries are:
    1. Suntec Convention Centre’s capacity to hold large MICE events is positive for Suntec REIT (SGX:T82U), and
    2. Centrally located retail properties CapitaLand Mall Trust (SGX:C38U), Mapletree Commercial Trust (SGX:N2IU) and Lendlease REIT (SGX:JYEU),
    3. office REIT Keppel REIT (SGX:K71U) and
    4. public transport ComfortDelGro (SGX:C52) benefitting from more employees returning to work.
  • See PDF report attached below for complete analysis.







Singapore Research DBS Group Research | Lee Keng LING DBS Research | https://www.dbsvickers.com/ 2020-10-13
SGX Stock Analyst Report BUY MAINTAIN BUY 4.960 SAME 4.960
BUY MAINTAIN BUY 1.370 SAME 1.370
BUY MAINTAIN BUY 0.900 SAME 0.900
BUY MAINTAIN BUY 1.20 SAME 1.20
BUY MAINTAIN BUY 2.400 SAME 2.400



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