Singapore Market August 2021 Wrap Up - CGS-CIMB Research 2021-08-31: Singapore In 5

YANGZIJIANG SHIPBLDG HLDGS LTD (SGX:BS6)

Singapore Market August 2021 Wrap Up - Singapore In 5

The FSSTI closes Aug 21 at 3,055.05 points, down 111.89 points (-3.53%).
Rising number of daily COVID-19 cases tests Singapore’s attempts to reopen; economic data reassuring.
We keep our end-2021F FSSTI target at 3,496 points, based on 0.5 standard deviation above 12-year mean P/E of 15.2x.

The FSSTI closed Aug at 3,055.05 points, down 111.89 points m-o-m (-3.53%). An increase in the number of daily COVID-19 cases and clusters following the government’s decision to gradually reopen the country, as well as fears of a taper in the US, hurt market sentiment.
Singapore’s revised 2Q21 GDP rebounded by 14.7% (14.3% advance release), due to a low base a year ago, beating both our and Bloomberg consensus estimates.
Jul 21 NODX growth slowed to 12.7%; nevertheless, it was an eighth consecutive month of y-o-y gains, and still above our and consensus estimates. Electronics NODX grew by 15% y-o-y in Jul (25.5% y-o-y in Jun), while non-electronics products gained 12.1% y-o-y in Jul (43.2% y-o-y in Jun), driven by
- specialised machinery (56.8% y-o-y),
- pharmaceuticals (51.2% y-o-y), and
- petrochemicals (49.4% y-o-y).
Jul 21 new home sales were up 46.7% y-o-y and 82.2% m-o-m, according to Urban Redevelopment Authority (URA) data, with the outside central area (OCR) accounting for two-thirds of the volume. The demand for resale properties was also firm, with condo prices rising 0.2% m-o-m (8% y-o-y), and volume of transactions up 22.5% m-o-m (68.25% y-o-y), according to Singapore Real Estate Exchange’s flash data.

2Q21 results season was expectedly more subdued than 1Q21’s. The positive-to-negative surprise ratio edged slightly negative to 0.95x, culminating in a slight earnings cut. A more detailed round-up of the 2Q21 earnings season, the roadmap for gradual opening of Singapore and its sectorial implications are available in report: Singapore Market Outlook - CGS-CIMB Research 2021-08-19: Done Well, Cautiously Optimistic.
All sectors continued to trade range-bound for the second consecutive month, except for Maritime.
Outperformers in the FSSTI were
- Yangzijiang Shipbuilding (SGX:BS6) (new orders),
- Thai Beverage (SGX:Y92) (good results), and
- ComfortDelGro (SGX:C52) (potential listing of Australian subsidiary).
The underperformers were
- SGX (SGX:S68) (weaker results amidst lower turnover),
- Jardine Matheson (SGX:J36) (associates’ performance), and
- Sembcorp Industries (SGX:U96) (impairment of asset).
In the mid-large cap space, outperformers were Frencken (SGX:E28) (good results), Olam (SGX:O32) (demerger and subsequent listing of Food unit), while NanoFilm Technologies (SGX:MZH) (poor results) and Geo Energy Resources (SGX:RE4) (profit-taking) were underperformers.
Institutional investors were net buyers for the preceding four weeks, buying Financials, Industrials, Property and REITs, with no significant sector outflows. Retail net inflows were positive for each of the preceding four weeks, with flows moving into Financials and REITS and out of Industrials and Property.

With yet another month of decline as the FSSTI fell 3.53% in Aug, we believe there is limited downside and a rebound should happen soon. Despite the recent weakness, the long-term view still shows a valid uptrend.
Notably, there is a strong cluster of support at the 3,020–3,050 levels that should act as a floor for the uptrend and ultimately halt the sell-off. In addition, the 200-day moving average of 3,040 should also provide additional support.
For further confirmation of a bullish reversal move, watch for the FSSTI to close above the 3,100 level for the start of the next leg higher where the bulls will be targeting the 3,280 resistance. See STI chart in report attached below.

LIM Siew Khee CGS-CIMB Research | Jeremy NG Choon Heng CGS-CIMB Research | https://www.cgs-cimb.com 2021-08-31

SGX Stock Analyst Report ADD MAINTAIN ADD 1.910 SAME 1.910