GENTING SINGAPORE LIMITED (SGX:G13)
KOUFU GROUP LIMITED (SGX:VL6)
FIRST RESOURCES LIMITED (SGX:EB5)
WILMAR INTERNATIONAL LIMITED (SGX:F34)
COMFORTDELGRO CORPORATION LTD (SGX:C52)
Singapore Market Focus - Speeding Towards Reopening
- Positive earnings revisions – FY21 earnings above pre-COVID.
- STI 2021 year-end target raised 4.5% to 3325.
- Inflation theme – First Resources (SGX:EB5) and Wilmar International (SGX:F34) are upstream beneficiaries; Yangzijiang Shipbuilding (SGX:BS6), City Developments (SGX:C09) and UOL Group (SGX:U14) are resilient.
- Speeding faster towards reopening - Frasers Centrepoint Trust (SGX:J69U), Mapletree Commercial Trust (SGX:N2IU), Suntec REIT (SGX:T82U), Koufu (SGX:VL6), Genting Singapore (SGX:G13), ComfortDelGro (SGX:C52) to benefit.
Positive earnings revision
- Singapore stocks under our coverage saw a second consecutive quarter of positive earnings revision at +2.3% for FY21 and +1.5% for FY22F. FY21F earnings is now expected to be 2% above FY19 (pre-COVID) level. UOB (SGX:U11) and OCBC (SGX:O39) led positive revisions with +5.5% for FY21F and +4.8% for FY22F.
STI 2021 year-end target raised
- We lift our 2021 STI year-end target by 4.5% to 3325 (previously 3180) pegged to 13.48x (+0.25 standard deviation) FY22F P/E.
- Only 6 out of 30 STI index component stocks are directly affected by the tighter measures (e.g. Genting Singapore (SGX:G13), Mapletree Commercial Trust (SGX:N2IU), SATS (SGX:S58), ComfortDelGro (SGX:C52)). The Singapore government has kept its 2021 GDP growth forecast at 4- 6% as stronger-than-expected 1Q and improving external environment may offset the 2Q slowdown due to current anti-COVID measures. Bias is on the upside towards 3300 by end July with support at 3115.
Inflation back in focus
- Metals and energy related commodity prices have jumped on rising global demand and supply shortfall due to COVID related restrictions. This benefits upstream producers such as First Resources (SGX:EB5) and in part Wilmar International (SGX:F34).
- The margin impact for downstream names such as shipbuilder Yangzijiang Shipbuilding (SGX:BS6), and property developers City Developments (SGX:C09) and UOL Group (SGX:U14) are not as outright negative as some of the costs can be passed on to their customers.
Speeding towards reopening
- The recent share price correction of domestic reopening names due to the current tighter measures may be the ‘last chance’ for investors to buy. Singapore targets at least 85% of population to receive at least one dose of the vaccine by National Day and be fully vaccinated by 4 October due to faster vaccine deliveries.
- Healthcare sector (IHH Healthcare (SGX:Q0F), Q&M Dental (SGX:QC7)) benefits from accelerated vaccination and testing programs.
- The resilience of the affected sectors against COVID news volatility goes up as more of the population gets vaccinated. Our picks for domestic reopening beneficiaries are
- retail malls (Frasers Centrepoint Trust (SGX:J69U), Mapletree Commercial Trust (SGX:N2IU), Suntec REIT (SGX:T82U)),
- leisure (Genting Singapore (SGX:G13)),
- F&B (Koufu (SGX:VL6)), and
- public transportation (ComfortDelGro (SGX:C52)).
- The possibility of quarantine free travel with countries that have brought the pandemic under control and whose population is also adequately vaccinated by year-end benefits SATS (SGX:S58) and hospitality REITs CDL Hospitality Trusts (SGX:J85) and Far East Hospitality Trust (SGX:Q5T).
- See the PDF report by DBS Research for complete analysis.
Kee Yan YEO CMT
DBS Group Research
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Janice CHUA
DBS Research
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Wei Le CHUNG
DBS Research
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https://www.dbsvickers.com/
2021-06-02
SGX Stock
Analyst Report
0.950
SAME
0.950
0.770
SAME
0.770
1.830
SAME
1.830
6.670
SAME
6.670
1.990
SAME
1.990
