Singapore Market October 2020 Wrap Up - CGS-CIMB Research 2020-10-30: Singapore In 5

ASCENDAS REAL ESTATE INV TRUST (SGX:A17U)

Singapore Market October 2020 Wrap Up - Singapore In 5

FSSTI closed Oct at 2,423.84 pts (down 1.73% m-o-m), amidst fresh EU and US concerns.
Singapore emerges from technical recession; government support for the economy continues.
We keep our end-CY20F FSSTI target at between 2,495 (13x CY21F P/E, -0.5 s.d. from mean) and 2,630 pts (14.3x CY21F P/E, mean).
Top picks:

The FSSTI closed Oct at 2,423.84 pts, down 42.78 pts (-1.73% m-o-m), amidst a second wave of COVID-19 in Europe, and pre-election jitters in the US. See the Performance of Straits Times Index constituents.
The Singapore government has extended bridging loans, training and support grants even as Singapore emerged from a technical recession following the lifting of the circuit breaker.
Excluding biomed, IPI for Sep 20 rose 8.5% y-o-y, boosted by pharma (+113.6% y-o-y) and electronics (301% y-o-y).
According to the quarterly data released by the Urban Redevelopment Authority (URA), 3Q20 private home prices rose 0.8% q-o-q. See Property Development & Inventory - CGS-CIMB Research 2020-10-16: Home Sales Remain Healthy In Sep20.
Retail rents dipped by 4.5% q-o-q although vacancy was flat at 9.6%. Office rents were also down by 4.5% q-o-q, with vacancy inching down to 12%, from 12.1% (2Q20).

We upgrade Ascendas REIT (SGX:A17U) to ADD with a higher target price of S$3.40, on interest cost savings from newly issued perps and contribution from new Australian properties –
- Ascendas REIT - CGS-CIMB Research 2020-10-26: Higher Portfolio Occupancy In 3Q.
Our regional Aviation report analyses the current state of the sector and implications post-COVID-19 –
- SATS - CGS-CIMB Research 2020-10-26: Slow Recovery; Not Cheap Enough.
- Singapore Airlines - CGS-CIMB Research 2020-10-26: No Urgency (Yet) To Add SIA Shares.
We expect Yangzijiang Shipbuilding (SGX:BS6) to benefit from the strong uptrend in freight rates and order momentum, while sporting undemanding valuations at 0.5x P/BV and 5x P/E ex-cash –
- Yangzijiang Shipbuilding - CGS-CIMB Research 2020-10-16: Rising Tide.

With the FSSTI down another 1.73% in Oct, wiping out the gains from earlier in the month, the bearish momentum appears to be accelerating. As the 2,570 resistance level capped the upside in the second week of Oct, the subsequent bearish move highlighted further weakness as the FSSTI broke below the Sep low of 2,448 pts.
Also, a more pronounced Lower High point established in Oct at 2,570 pts suggests the downtrend is back in control. As such, expect the FSSTI to trend lower to the 2,300 support in the coming weeks.
Any near-term rebound is likely to be capped by the overhead resistance at 2,500 pts.