Credit Suisse says 2H Asia markets rally led by industrials, which best performing sector (+29%); “we continue to see value left in the sector, as ROE continues to surprise on the upside.”

Within Singapore, says Outperform-rated Keppel Corp (BN4.SG), Yangzijiang (BS6.SG), Sembcorp Industries (U96.SG), Sembcorp Marine (S51.SG) trading at 14%-31% discount to region on P/B to ROE valuation model.

“In particular, Keppel Corp, our top pick in the Singapore capital goods sector, is trading at a 31% discount to the region and ranks highly in the undervalued list. We believe the stock will be rerated, as rig orders strengthen going forward.”

In China shipbuilding space, prefers Yangzijiang over Cosco “due to its exposure to the containership market, better execution capabilities and attractive valuations.”

Keppel +0.7% at $9.76, Yangzijiang +1.1% at $1.88.

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