Excerpts from UOB Kay Hian report
|
STRATEGY – Singapore Alpha Picks: Outperformed In 3Q19; Add Yangzijang |
While the FSSTI retreated 6.1% in 3Q19, our alpha picks gained 2.0% in the quarter, led by our small/mid-cap picks (Fu Yu: +11.5%, Koufu: +5.8%) and our short call on SATS (-11.2%).
For September, our portfolio rose 0.9% mom, surpassing the FSSTI’s gain of 0.4% mom; notable outperformers for the month were Fu Yu and CDREIT.
For October, we add Yangzijiang as we believe the recent share price weakness is unwarranted and it is currently trading at an inexpensive valuation of 0.56x 2019F P/B.
|
ANALYSTS’ TOP ALPHA* PICKS |
||||
|
Analyst |
Company |
Rec |
Change# |
Catalyst |
|
Adrian Loh |
Yangzijiang |
BUY |
- |
New ship-building order announcements |
|
John Cheong/ Joohijit Kaur |
Venture Corp |
BUY |
-0.7 |
New product launches, US-China trade deal |
|
Adrian Loh |
Keppel Corp |
BUY |
-6.8 |
Continued recovery in new-order flow in 2H19 |
|
Loke Peihao/ Jonathan Koh |
CDREIT |
BUY |
-1.8 |
Recovery in contribution from Orchard Hotel; growing Singapore tourist arrivals |
|
Leow Huey Chuen |
Wilmar |
BUY |
9.9 |
Announcement of the final approval for the listing of Yihai Kerry Arawana Holdings. |
|
K Ajith |
ST Engineering |
BUY |
-0.3 |
Already in place. |
|
Jonathan Koh |
DBS |
BUY |
-11.0 |
US-China trade deal and strong deposit franchise which ensures firmer NIM. |
|
John Cheong/ Joohijit Kaur |
Koufu |
BUY |
-10.6 |
Sale of its two central kitchens and better-than-expected contribution from R&B Tea. |
|
John Cheong |
Fu Yu |
BUY |
16.0 |
Higher-than-expected dividend or potential takeover offer. |
|
* Denotes a timeframe of 1-3 months and not UOBKH’s usual 12-month investment horizon for stock recommendation |
||||
ACTION
Ren Yuan Lin, chairman, YZJ. NextInsight file photo• Adding Yangzijiang to our October portfolio. We add Yangzijiang as we see the slump in share price in August post news reports of the chairman assisting investigations in China to be unwarranted, given that it does not involve the company or its funds.
Meanwhile, mid-term shipbuilding outlook appears positive.
On a valuation basis, it is currently trading at 0.56x 2019F P/B which we view as inexpensive as it is -2SD below the company’s 5-year historical P/B.
|
KEY RECOMMENDATIONS |
|||
|
Company |
Share Price |
Target Price |
Upside (%) |
|
CDL Htrust |
1.62 |
2.06 |
27.2 |
|
DBS Fu Yu |
24.57 |
31.30 |
27.4 |
|
|
0.225 |
0.285 |
26.7 |
|
Keppel Corp |
5.87 |
7.61 |
29.6 |
|
Koufu |
0.72 |
0.95 |
31.9 |
|
ST Engineering |
3.81 |
4.34 |
13.9 |
|
Venture Corp |
15.37 |
17.70 |
15.2 |
|
Wilmar |
3.65 |
4.40 |
20.5 |
|
Yangzijiang |
0.96 |
1.46 |
52.1 |
|
Source: UOB Kay Hian |
|||
Full report here.
