FOOD EMPIRE HOLDINGS LIMITED (SGX:F03)
ESR-LOGOS REIT (SGX:J91U)
HRNETGROUP LIMITED (SGX:CHZ)
KIMLY LIMITED (SGX:1D0)
RAFFLES MEDICAL GROUP LTD (SGX:BSL)
Singapore Equity Strategy - Stay Defensive As Outlook Remains Uncertain
- Maintain a balanced portfolio with a defensive bias. Reopening of Singapore’s economy and international borders bodes well for the near-term domestic consumption recovery story, benefitting consumer staples, consumer discretionary, aviation, land transport, and tourism-related stocks. In addition, high commodity prices and rising interest rates should be positive for plantation, oil & gas, and financial stocks.
- Nevertheless, the ongoing supply chain disruptions, uncertainty over the rate of inflation growth, and the resultant expectations of rapid rises in interest rate hike for rest of 2022 would imply elevated external risks.
Top Pick: Adding Food Empire (FEH) to our Top Picks post a strong 1Q22 results.
- Food Empire (SGX:F03) reported strong 1Q22 numbers, with revenue growing 7.6% y-o-y to US$82.6m and net profit up 34.4% y-o-y to US$9.2m. This was despite the Russo-Ukrainian war inhibiting some segmental numbers and a one-off US$3.2m FX loss. Consumer demand in its key markets has remained firm, while that in markets within South Asia demand registered a strong growth.
- We have confidence in the resilience of Food Empire’s business, and believe this consumer staples counter offers investors a sweet bargain - it is trading at just 7.6x FY22F P/E.
Sector Pick: Removing Frencken from Manufacturing & Technology sector top picks post recent downgrade.
- Frencken (SGX:E28) reported 12.6% y-o-y decline in net profit during 1Q22 amidst higher raw materials, freight, and overhead costs. We believe the margin pressure is likely to sustain and therefore lowered our FY22F profit estimate by 17.5%. This, along with the devaluation of P/E multiples for global tech sector, would limit the upside for Frencken. We now value Frencken at 10x forward P/E from earlier 14x forward P/E.
- With Frencken now downgraded to Neutral, Venture Corp (SGX:V03) remains the only preferred pick for the Manufacturing & Technology sector.
Singapore equity themes for 2Q22 largely unchanged
- Our Singapore equity themes for 2Q22 remain largely unchanged:
- Buying the beneficiaries of the rising interest rates cycle;
- continuing exposure to economic reopening plays;
- buying beneficiaries or stocks that are defensive against rising inflation;
- buying defensive stocks that will deliver EPS and DPS growth, net margin expansions, and ROE improvements; and
- buying REITs that are defensive and those that will benefit from the opening of the economy.
Singapore Top Stock Picks
- We reiterate a barbell portfolio strategy, with a healthy weightage for defensive stocks. See the PDF report attached below for stock comparison tables.
Top Singapore Stock Picks - Large Cap
- Ascendas REIT (SGX:A17U)
- City Developments (SGX:C09)
- DBS (SGX:D05)
- Genting Singapore (SGX:G13)
- OCBC (SGX:O39)
- SingTel (SGX:Z74)
- ST Engineering (SGX:S63)
- Suntec REIT (SGX:T82U)
- Thai Beverage (SGX:Y92)
- Venture Corp (SGX:V03)
- Wilmar International (SGX:F34)
Top Singapore Stock Picks - Mid-to-small Cap
Shekhar Jaiswal
RHB Securities Research
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https://www.rhbinvest.com.sg/
2022-06-01
SGX Stock
Analyst Report
0.950
SAME
0.950
0.53
SAME
0.53
1.01
SAME
1.01
0.46
SAME
0.46
1.55
SAME
1.55
