Singapore Market November 2020 Wrap Up - CGS-CIMB Research 2020-11-30: Singapore In 5

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DBS GROUP HOLDINGS LTD (SGX:D05) OVERSEA-CHINESE BANKING CORP (SGX:O39) UNITED OVERSEAS BANK LTD (SGX:U11) SINGAPORE AIRLINES LTD (SGX:C6L)

Singapore Market November 2020 Wrap Up - Singapore In 5

• The Straits Times Index (STI) closed Nov at 2805.95, up 15.5% m-o-m, amidst growing optimism on the global economy.
• Our rolled-forward end-CY21 FSSTI target is 3,068 (14.2x CY22F P/E, historical mean), factoring in a pickup in economic activities and low interest rates.
• Our Singapore stock top picks:
  • Singapore Airlines (SGX:C6L),
  • UOB (SGX:U11),
  • DBS (SGX:D05),
  • Keppel Corp (SGX:BN4),
  • SingTel (SGX:Z74),
  • Thai Beverage (SGX:Y92),
  • CapitaLand (SGX:C31),
  • Ascendas REIT (SGX:A17U),
  • Frasers Centrepoint Trust (SGX:J69U),
  • Frasers Logistics & Commercial Trust (SGX:BUOU),
  • SBS Transit (SGX:S61),
  • Boustead Singapore (SGX:F9D),
  • Japfa (SGX:UD2),
  • CSE Global (SGX:544),
  • Koufu (SGX:VL6),
  • UG Healthcare (SGX:8K7).

3Q20 GDP contracts less severely than expected; optimism growing

• The Straits Times Index (STI) closed November 2020 at 2805.95, up 382.11 or 15.8% m-o-m, amidst growing optimism on the global economy – US voters limited Trump’s presidency to a single term, and news of two potential viable COVID-19 vaccines.
• Singapore’s GDP contracted at a slower rate of 5.8% y-o-y in 3Q20, against the government’s advance estimates of -7.0% y-o-y, bolstered by export-oriented biomed and electronics segments which offset weaker service and construction segments.
• Oct NODX, however, contracted for the first time since May 2020 (-3.1% y-o-y) as Huawei sanctions and lockdowns in regional trading partners hurt Singapore exports.
• Property sales declined further, down 51.7% m-o-m in Oct, due to a government clampdown on the re-issuing of options to purchases by developers, amidst few new project launches. See
  • Property Development & Inventory - CGS-CIMB Research 2020-11-16: Low Volume In The Absence Of New Launches.

Strong earnings season; market EPS upgrade

• All sectors gained ground in Oct, with consumer, telcos and property leading the pack. The prospects of viable vaccines against COVID-19 and a de-escalation of hostile US trade policies were major factors in stock movements.
• Amongst index stocks, SATS (SGX:S58), Singapore Airlines (SGX:C6L), Genting Singapore (SGX:G13) gained the most, while Yangzijiang Shipbuilding (SGX:BS6), Mapletree Industrial Trust (SGX:ME8U), Keppel DC REIT (SGX:AJBU) underperformed.
  • See Straits Times Index (STI) Constituents share price performance.
• In the mid-large cap space, Hi-P International (SGX:H17), SATS (SGX:S58) and Sembcorp Marine (SGX:S51) outperformed while Riverstone (SGX:AP4), Sheng Siong (SGX:OV8), and Yangzijiang Shipbuilding (SGX:BS6) brought up the rear.
• A slew of late positive earnings surprises brought the 3Q20 results season to close on a positive note, and we upgraded market EPS for the first time this year - see report:
  • Singapore Stock Strategy - CGS-CIMB Research 2020-11-17: First Earnings Upgrade Offers Hope; Mean Reversion Ahead.
  • Singapore Stock Picks - CGS-CIMB Research 2020-11-17: Go With The Flow, Don’t Fight The Market.
• In Oct, m-o-m institutional fund flows were finally positive for the first time in 2020, with a big move into financial services and to a much smaller extent, into industrials and consumer. Funds exited tech, telcos, property, REITs and healthcare.
• Retail investors took profit in Oct, given the recent sharp run-up, exiting financial services, industrials and consumer, while moving into REITs, telcos and tech.
• See
  • SGX Market Fund Flow Summary;
  • SGX Weekly Fund Flow by Sector.

Key corporate news

• CapitaLand Retail China Trust (SGX:AU8U) raises capital via a non-renounceable preferential offering (56 for every 1,000, 69m new units) at S$1.17, and placement of 205.3m new units at S$1.195.
  • See CapitaLand Retail China Trust Announcements.
• A consortium led by Sunningdale Tech (SGX:BHQ)’s chairman offered to take Sunningdale Tech private at S$1.55 per share.
  • See Sunningdale Tech Announcements.
• Cortina Holdings (SGX:C41) to acquire privately-held Sincere Watch for S$84.5m.
  • See Cortina Holdings Announcements.

Research reports that you should not miss

• We raise Singapore banks - DBS (SGX:D05), OCBC (SGX:O39) and UOB (SGX:U11)'s target prices, pegging them to pre-pandemic valuations, in view of clearer asset quality visibility and positive newsflow. See
  • Singapore Banks - CGS-CIMB Research 2020-11-27: An Injection Of Confidence.
  • DBS Group - CGS-CIMB Research 2020-11-27: Pricing In An Accelerated Recovery.
  • OCBC - CGS-CIMB Research 2020-11-27: Looking Forward To More Normal Scenarios.
  • UOB - CGS-CIMB Research 2020-11-27: Looking Past Asset Quality Negativity.
• Singapore Airlines (SGX:C6L) has been upgraded to ADD (from Hold) as we believe downside surprises are capped, as its aircraft assets have already been impaired and its capital raising completed. See
  • Singapore Airlines - CGS-CIMB Research 2020-11-16: Upgrading SIA To ADD On Improving Risk-Reward.

Technical perspective

• Since the bullish crossover signal between the 20-day and 60-day moving average was triggered on 9 Nov (see Fig1 in PDF report attached below), the Straits Times Index (STI) has been trending higher with surging momentum.
• The breakout above multiple key resistance levels have also effectively turned the trend bullish. However, in the next couple of weeks, the STI could enter a correction phase as the bullish momentum appears overstretched.
• The 15.8% rally in Nov has driven the STI’s Relative Strength Index (RSI) to an extreme overbought high of 83. Historically, the STI tends to enter into a period of correction when the RSI exceeds the 70 overbought level. Therefore, we expect the ongoing correction to take the STI down to the 2,635 – 2,700 support level before the uptrend resumes.
• The next leg higher into the uptrend will likely see the FSSTI aiming for the 3,000 – 3,044 resistance.

Recent reports on our Singapore stock picks:

• Singapore Stock Picks - CGS-CIMB Research 2020-11-17: Go With The Flow, Don’t Fight The Market.
  • Singapore Airlines - CGS-CIMB Research 2020-11-16: Upgrading SIA To ADD On Improving Risk-Reward.
  • DBS Group - CGS-CIMB Research 2020-11-27: Pricing In An Accelerated Recovery.
  • UOB - CGS-CIMB Research 2020-11-27: Looking Past Asset Quality Negativity.
  • Keppel Corporation - CGS-CIMB Research 2020-10-29: Looking Forward To 100-Day Plan Outcome.
  • SingTel - CGS-CIMB Research 2020-11-12: 1HFY21 Some Positives Amid Weak Results.
  • CapitaLand - CGS-CIMB Research 2020-11-04: Signs Of Recovery.
  • Ascendas REIT - CGS-CIMB Research 2020-11-10: Acquisitions Galore.
  • Frasers Centrepoint Trust - CGS-CIMB Research 2020-11-03: Warding Off COVID-19 Impact.
  • Frasers Logistics & Commercial Trust - CGS-CIMB Research 2020-11-06: Stable Performance.
  • SBS Transit 3Q20 Update - CGS-CIMB Research 2020-11-12: Wheels In Motion.
  • Boustead Singapore - CGS-CIMB Research 2020-11-17: Firing On All Cylinders.
  • Japfa - CGS-CIMB Research 2020-10-30: Indonesia Poultry & Dairy Beats Expectations.
  • CSE Global - CGS-CIMB Research 2020-11-09: 3Q20 Systems Intact.
  • UG Healthcare - CGS-CIMB Research 2020-11-06: A Strong Start To The Year.

LIM Siew Khee CGS-CIMB Research | Jeremy NG Choon Heng CGS-CIMB Research | https://www.cgs-cimb.com 2020-11-30

SGX Stock Analyst Report ADD MAINTAIN ADD 28.350 SAME 28.350

ADD MAINTAIN ADD 12.520 SAME 12.520

ADD MAINTAIN ADD 27.720 SAME 27.720

ADD MAINTAIN ADD 4.570 SAME 4.570