Singapore Market Strategy - CGS-CIMB Research 2021-07-07: Reopening Timeline

SATS LTD. (SGX:S58) FRASERS CENTREPOINT TRUST (SGX:J69U) UNITED OVERSEAS BANK LTD (SGX:U11)

Singapore Market Strategy - Reopening Timeline

Singapore is on track to ease COVID-19 measures, reopen its borders. Diners to be capped at 5 per group (from two) from 12 Jul. Work-from-home stays as a default.
Singapore targets to have 50% of its population fully vaccinated by week of 26 Jul; will implement differentiated measures for those vaccinated. Aims to progressively reopen borders from by end-Sep or early-Oct.
Our reopening picks:
- SATS (SGX:S58) (international travel),
- Frasers Centrepoint Trust (SGX:J69U) (retail) and
- UOB (SGX:U11) (laggard).

With new daily in-community COVID-19 cases reduced to about 4 in the past week, the Singapore government is on track to ease measures to allow larger group of gatherings. By 12 Jul, dining rule would relax to allow 5 pax per group (2 pax currently). It targets to have 50% of Singapore’s population to be fully vaccinated by week of 26 Jul, increasing to 75% of the population by end-Sep or early-Oct. It also aims to progressively reopen the nation’s borders from end-Sep or early-Oct.
Currently, Air Travel Pass for foreigners with 1-2 days of isolation are only applicable for Brunei, Mainland China and New Zealand nationals. There have been talks of adding Australia, Taiwan and South Korea.

We expect aggressive COVID-19 testing to continue to ensure minimal transmission risks. There are plans to roll out faster and simpler COVID-19 testing methods (e.g. breathalysers), to be used widely in scenarios such as mass gatherings and inbound traveller testing. Antigen Rapid Test (ART) self-test kits are also available over the counter for individuals. However, PCR tests to still be used given it is the gold standard in specificity and sensitivity. Average daily COVID-19 test in Singapore stood at 72,600/day in the past week.

Singapore is entering the 2Q21 results season from the week of 19 Jul. We have highlighted previously that the additional restrictions imposed from 16 May to 13 Jun (Phase 2 Heightened Alert) could see the earnings upgrade momentum taper in the 2Q21 results season after three consecutive quarters of upgrade.
Notably, banks, which typically drive the market EPS, may be more conservative in their assessment of asset quality amid the resurgence of COVID-19 cases in the region with the risk of loan moratoriums being introduced. However, we believe there are some stocks that could yield positive earnings surprise, especially in the small cap space, namely
Big caps that could surprise positively are
- SGX (SGX:S68) and
- Raffles Medical (SGX:BSL).

LIM Siew Khee CGS-CIMB Research | https://www.cgs-cimb.com 2021-07-07

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