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UOB KAYHIAN |
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Valuetronics (VALUE SP) Pain Before Gain; D/G To SELL
Downgrade to SELL (from Buy) with new SGD0.50 TP from SGD0.66, 15% downside. Valuetronics guided FY21F earnings will be significantly lower compared to FY20 and highlighted that some of its customers in the auto and consumer electronics segments are planning to switch over to other suppliers in North America to serve the US market in FY21. We cut our FY21F EPS by 14% to reflect the lower revenue expected.
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Alpha Picks: Outperformance Led By Small/Mid Caps
Our portfolio rose 1.4% mom in May, significantly outperforming the FSSTI’s decline of 4.3% mom. For June, we add CMT, CD, Riverstone and CSE, and remove Koufu, Propnex and YZJ.
WHAT’S NEW Reviewing our picks in May. Our portfolio outperformed the broader market with an increase of 1.4% mom vs the FSSTI’s retracement of 4.3% mom. Portfolio performance was mixed with gains in our small-mid cap picks (Japfa: 18.8% mom, Propnex: 8.4% mom, Koufu: 5.7% mom) and Mapletree Industrial (6.7% mom) offsetting the declines from the other picks.
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UOB KAYHIAN |
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Banking – Singapore
Risk Abating, Paving The Way For Valuations To Normalise Systemic risk has abated as businesses resume operations. Banks benefit from an earlier start to Phase 2 of re-opening in Singapore as stress on the corporate sector would be reduced. The government has stabilised vulnerable sectors and SMEs through JSS and government-assisted loan schemes. Our top pick is OCBC (Target: S$12.18) as it is trading at 1SD below long-term mean, at 0.88x 2020F P/B. We also like DBS for its consistency in execution and attractive 2020F dividend yield of 6%. Maintain OVERWEIGHT on the sector.
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Check out our compilation of Target Prices
