COMFORTDELGRO CORPORATION LTD (SGX:C52)
SBS TRANSIT LTD (SGX:S61)
LENDLEASE GLOBAL COMMERCIAL REIT (SGX:JYEU)
Singapore Market September 2020 Wrap Up - Singapore In 5
- FSSTI closed Sep at 2,466.62 pts (-2.6%). Tentative steps into a new normal.
- End-CY20F FSSTI target remains at between 2,495 (13x CY21F P/E, -0.5 s.d. from mean) and 2,630 pts (14.3x CY21F P/E, mean).
- Companies that should benefit in the immediate term following further easing of restrictions: ComfortDelGro (SGX:C52), SBS Transit (SGX:S61), Lendlease REIT (SGX:JYEU), CapitaLand Mall Trust (SGX:C38U), Mapletree Commercial Trust (SGX:N2IU), Frasers Centrepoint Trust (SGX:J69U) and Koufu (SGX:VL6).
Positive data surprises. Restrictions ease.
- The FSSTI closed Sep at 2,466.62 pts, down 65.89 pts (-2.6%) from Aug, as countries grapple with a second wave of COVID-19 outbreaks, and the Nov 20 US elections adding further uncertainty. As of 23 Sep, the Singapore government has further loosened restrictions on work, gatherings and essential travel due to the low number of COVID-19 cases in the community.
- Singapore’s NODX expanded by 7.7% y-o-y in Aug 20 (Jul: +5.9% y-o-y), above our estimate of +3.4% y-o-y, underpinned by electronics, non-monetary gold, specialised machinery and food preparation sectors.
- Ex-Biomed, IPI for Aug 20 rose 15.3% y-o-y (Jul: -4.3% y-o-y), with a spike in manufacturing (+44.2%% y-o-y), due to a pick-up in global activity and stockpiling ahead of US’s ban on suppliers to Huawei (from 15 Sep), while Petrochem (+7.8% y-o-y) and Pharma (+5.7% y-o-y) also clocked gains.
- According to Urban Redevelopment Authority data, primary home sales in Aug 20 rose by 11.8% y-o-y and 16.3% m-o-m, with half coming from Rest of Central Region (RCR) projects and another 40% from suburban projects.
Market movers and sector flows
- Sectors traded mostly range-bound, with Utilities and Maritime outperforming, while O&G, Consumer Services and Telcos underperformed.
- FSSTI outperformers for Sep were, Sembcorp (SGX:U96) (removal of Sembcorp Marine (SGX:S51) overhang, cheaper than regional peers), Yangzijiang Shipbuilding (SGX:BS6) (new orders), while Dairy Farm International (SGX:D01) (overbought previously), SingTel (SGX:Z74) and SATS (SGX:S58) (grounding of travel) underperformed.
- In the mid-large cap space, Hutchison Port Holdings Trust (SGX:NS8U) led gainers due to high current dividend yield and better prospective business conditions, while Sembcorp Marine (SGX:S51) (post-rights) and Riverstone (SGX:AP4) (placement out by insider) rounded up the underperformers.
- Aug continued to see net outflows by funds, as institutional investors bought into REITs and, to a smaller extent, Consumer Cyclicals and Resources. Retail sentiment remains buoyant, with inflows across the board; favoured sectors: Financials, Telcos and Consumer Cyclicals.
- See
- See also recent SGX market update: Institutions Net Buyers of Technology, Retail and Tourism Stocks in 3Q20.
Key corporate news
- UG Healthcare to undergo 1-for-3 stock split (new stock code w.e.f. 2nd Oct: UG Healthcare (SGX:8K7)).
- Parkway Life REIT (SGX:C2PU) joins FTSE EPRA NAREIT Global Developed Index (w.e.f. 18th Sep). See Parkway Life REIT Announcements.
- Frasers Centrepoint Trust (SGX:J69U) acquires remaining 63.1% of ARF; to undertake private placement and preferential offering to fund deal. See Frasers Centrepoint Trust Announcements.
- Lippo Malls Indonesia Retail Trust (SGX:D5IU) to raise S$280m through 160-for-100 rights issue. See Lippo Malls Indonesia Retail Trust Announcements.
Research reports that you should not miss
- We are the first to initiate on SBS Transit (SGX:S61) – with an ADD rating and Target Price of S$3.40; we believe market has not priced in its recovery scenario and potential catalysts.
- We also initiate coverage on Lendlease Global Commercial REIT (SGX:JYEU) – with an ADD rating and DDM-based Target Price of S$0.85 (COE 7.6%, terminal growth 2.0%); we believe it is a domestic recovery proxy for COVID-19, with upside from acquisitions and asset enhancements.
Technical perspective
- The FSSTI declined 2.6% in Sep, reinforcing the Head and Shoulders pattern that was validated in Jul. Recall that the bearish break below the uptrend line or neckline in Jul (See Fig1 in PDF report attached below) provided the signal that the FSSTI could see further downside to the 2,310 support area. Since then, the FSSTI has showed a growing bearish momentum as the 20-day moving average capped the upside on multiple occasions.
- More notably, with the recent bearish breakout below the 2,480-2,500 critical support area in Sep, the next leg of sell-offs appears ready to take over to target the 2,310 support area. In case of any near-term rebound, the 20- and 60-day moving average at the 2,500 to 2,540 area would likely limit the upside.
LIM Siew Khee
CGS-CIMB Research
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Jeremy NG Choon Heng
CGS-CIMB Research
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https://www.cgs-cimb.com
2020-09-30
SGX Stock
Analyst Report
1.700
SAME
1.700
3.400
SAME
3.400
0.854
SAME
0.854