Singapore Market Feb 2021 Wrap Up - CGS-CIMB Research 2021-02-26: Singapore In 5

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SATS LTD. (SGX:S58) SINGAPORE AIRLINES LTD (SGX:C6L)

Singapore Market Feb 2021 Wrap Up - Singapore In 5

• The FSSTI closed Feb 21, at 2,949.04 points, up 1.6% m-o-m.
• The economy contracted less than expected, while NODX expanded. The Budget is to support job retention, reskilling and growth.
• We keep our end-21F FSSTI target of 3,068 points, based on 14.2x forward P/E. There could be a potential revision following the results round-up.

Better-than-expected data, SG Budget 2021 to support job growth

• The FSSTI closed Feb 21 at 2,949.04 points, up 46.5 points m-o-m (1.6%), as trading remained range-bound due to lack of catalysts.
• Budget 2021 saw the job support scheme extended to still-affected sectors; six months for aviation, aerospace and tourism; and three for retail, arts, and marine and offshore. Additional grants were made to the Jobs Growth Incentive scheme to facilitate training and job placement for locals (200k jobs, 35k traineeships).
• Singapore’s economy contracted by 2.4% in 4Q20 (advance estimate - 3.8%) with upward revisions to
  • Manufacturing (-1.4% q-o-q seasonally adjusted vs advance estimate -2.1% );
  • Construction (+55.6% q-o-q seasonally adjusted vs advance estimate +34.4%) and
  • Services (+4.1% q-o-q seasonally adjusted vs advance estimate +2.4% ).
• Jan 21 NODX expanded 12.8% y-o-y (+6.8% y-o-y in Dec), above ours’ and consensus estimates, on the back of
  • Electronics (+13.5% y-o-y),
  • Specialised Machinery (+53.2% y-o-y),
  • Petrochemicals (+10.1% y-o-y), and
  • Non-monetary Gold (+70.9% y-o-y).
• Private home sales in Jan 21 rose by 32% m-o-m, due to
  • simultaneous launches of big projects,
  • talk of new cooling measures spurring investors to buy pre-emptively.
• The resale market also saw increased activity, with volume up 8.6% m-o-m and prices rising 1.2% m-o-m.

More positive earnings surprises

• Heading towards the end of earnings season, the current earning surprise ratio is ~1.65 (23 above, 14 below, and 17 in-line).
• Most sectors traded within a narrow band. The best performing sectors were Healthcare, Consumer Services, and Maritime.
• Index performers were
  • Singapore Airlines (SGX:C6L) and SATS (SGX:S58) (potential early resumption of travel), and
  • Yangzijiang Shipbuilding (SGX:BS6) (new orders).
• Index underperformers were
  • Thai Beverage (SGX:Y92) (retracing from proposed spin-off listing high),
  • Jardine Matheson (SGX:J36) (poor associates results), and
  • Keppel DC REIT (SGX:AJBU) (change of CEO).
• Mid-large caps top gainers
  • Thomson Medical (SGX:A50) (return to profit) and
  • Oceanus Group (SGX:579)
• Mid-large caps top losers were
  • UMS Holdings (SGX:558) (fall from three-year high), and
  • Manulife US REIT (SGX:BTOU) (poor results).
• Institutional investors were sellers in most sectors with Consumer Non-cyclicals, Telcos and REITs seeing the heaviest outflows, while there were marginal inflows to Healthcare, Consumer Cyclicals and Oil & Gas. Retail investors resumed accumulating, buying Financials, REITs and Industrials. See
  • SGX Market Fund Flow Overview,
  • SGX Cumulative Fund Flow By Sector,
  • SGX Weekly Fund Flow By Sector.

Key corporate news

• Cromwell REIT (SGX:CNNU) placed out 232.6m new units at 43 € cents per unit, raising €100m.
  • See Cromwell REIT Announcements.
• City Developments (SGX:C09) acquired a majority stake in Shenzhen tech park from Sincere Property, China Ping An units.
  • See City Developments Announcements.
• Keppel REIT (SGX:K71U) placed out 238.9m new units at S$1.13, raising around S$270m, with the majority of the proceeds funding its acquisition of Keppel Bay Tower.
  • See Keppel REIT Announcements.

Research reports that you should not miss

• We upgrade SATS (SGX:S58) from Hold to ADD with a higher target price, on the back of an expected turnaround driven by an increase in cargo. See report:
  • SATS - CGS-CIMB Research 2021-02-11: Bottomed Out.
• Although the road to full recovery is long, for Singapore Airlines (SGX:C6L), we believe the worst is over. See report:
  • Singapore Airlines (SIA) - CGS-CIMB Research 2021-02-05: Narrow 3Q Loss Should Please The Market.
  • Singapore Airlines (SIA) - CGS-CIMB Research 2021-02-05: Another S$16bn Of Capital-Raising Headroom.
  • Singapore Airlines (SIA) - CGS-CIMB Research 2021-02-10: Capex Pushed Forward To Future Years.

Straits Times Index - Technical perspective

• After 5 weeks of trading in a correction phase, the recent rebound off the cluster of support at the 60-day moving average and 2,870 support showed some signs of life.
• More importantly, the bullish breakout above the downtrend line and 20-day moving average on 24 Feb 2021 should kickstart the next higher leg.
• In addition, the follow-through on 26 Feb 2021 also broke above the 3-week range showed further signs of strength (highlighted in blue in Fig1 in report attached below). Therefore, expect the FSSTI to trend higher to target the 3,100 – 3,150 resistance level over the coming weeks.
• The near-term support at 2,870 should continue to keep the uptrend intact if a correction takes over.

LIM Siew Khee CGS-CIMB Research | https://www.cgs-cimb.com 2021-02-26

SGX Stock Analyst Report ADD MAINTAIN ADD 4.300 SAME 4.300

ADD MAINTAIN ADD 4.890 SAME 4.890