9 undervalued stocks to watch in the MSCI Singapore Index: KGI

9 undervalued stocks to watch in the MSCI Singapore Index: KGI

By: 
Stanislaus Jude Chan
18/12/18, 03:02 pm

SINGAPORE (Dec 18): KGI Securities has highlighted nine stocks in the MSCI Singapore Index that are currently undervalued, even as they each offer a FY18 dividend yield of more than 3.5%.

According to KGI, the nine stocks – ComfortDelGro Corporation, United Overseas Bank (UOB), Keppel Corporation, Singapore Technologies Engineering (ST Engineering), Singapore Exchange (SGX), Oversea-Chinese Banking Corporation (OCBC), CapitaLand, Genting Singapore (GENS), and Singapore Airlines (SIA) – are trading below their 10-year price-to-earnings (P/E) and price-to-book (P/B) averages.

“We believe that they offer limited downside risks while paying an attractive dividend yield,” says analyst Joel Ng in a report on Tuesday.

Consisting 25 constituents, the MSCI Singapore Index is designed to measure the performance of the large- and mid-cap segments of the Singapore market. The index covers approximately 85% of the free float-adjusted market capitalisation of the Singapore equity universe.

“70% of MSCI Singapore stocks are trading below their 10-year P/B average while 60% are trading below their 10-year P/E average,” says Ng.

ComfortDelGro Corporation

All eyes are whether ride-hailing entrant Go-Jek will wage a price war against incumbent Grab, and how this renewed competition in the private hire car space will affect ComfortDelGro’s taxi business.

ComfortDelGro posted a 2% drop in earnings to $78.5 million for the 3Q ended September, mainly due to lower dividends received from its overseas subsidiary, Cabcharge Australia.

Revenue for the quarter grew 8.5% on-year to $967.9 million, driven by increased contributions from new acquisitions.

See: ComfortDelGro posts 2% lower 3Q earnings; to set up new US$100 mil global VC fund

As at 12pm on Tuesday, shares in ComfortDelGro are trading 2 cents lower at $2.12, some 15.5% lower than its 52-week high of $2.51 on Jun 5.

United Overseas Bank (UOB)

In 3Q18, UOB reported a 17% increase earnings to $1.04 billion, driven by double-digit growth in net interest income and lower allowances.

Net interest income rose 14% to $1.60 billion from healthy loan growth and a net interest margin uplift of two basis points to 1.81%. Total allowances more than halved to $95 million, largely due to high allowances provided for impaired loans from the oil and gas and shipping sectors in 3Q17.

See: UOB reports 17% higher 3Q earnings of $1.04 bil on higher net interest income and lower allowances

As at 12pm on Tuesday, shares in UOB are trading 56 cents lower at $24.36, some 19.2% lower than its 52-week high of $30.14 on Apr 30.

Keppel Corporation

Keppel Corp saw its earnings sink by 15% to $226 million in the 3Q18 earnings ended September, mainly due to lower contributions from the investments and property divisions.

However, the conglomerate put in stronger performance in the infrastructure and O&M divisions, which registered a net profit of $2 million, after losses in the preceding three quarters.

3Q18 group revenue came in at $1.3 billion, 20% lower than the $1.6 billion registered a year ago.

See: Keppel reports 15% lower 3Q earnings of $226 mil on lower contributions from investments and property divisions

As at 12pm on Tuesday, shares in Keppel Corp are trading 8 cents lower at $6.02, some 32.1% lower than its 52-week high of $8.86 on Jan 29.

Singapore Technologies Engineering (ST Engineering)

ST Engineering reported a 5.3% increase in 3Q18 earnings to $134.6 million, as revenue rose 1% to $1.63 billion on the back of higher contributions from the group’s Aerospace and Electronics sector.

Gross profit edged up by 1% to $342.6 million in 3Q18, despite higher cost of sales at $1.28 billion.

See: ST Engineering posts 5% increase in 3Q earnings to $135 mil

As at 12pm on Tuesday, shares in ST Engineering are trading 6 cents lower at $3.46, some 6.0% lower than its 52-week high of $3.68 on Apr 19.

Singapore Exchange (SGX)

SGX reported 1Q19 earnings of $91.1 million, 0.4% higher than a year ago, while earnings per share remained unchanged from a year ago at 8.5 cents.

Revenue for 1Q19 came in 2.2% higher at $208.9 million, compared to $204.5 million a year ago.

See: SGX reports flat 1Q earnings of $91.1 mil on slight rise in revenue

As at 12pm on Tuesday, shares in SGX are trading 11 cents lower at $7.13, some 16.0% lower than its 52-week high of $8.49 on Jan 23.

Oversea-Chinese Banking Corporation (OCBC)

OCBC reported earnings of $1.25 billion for 3Q18, an increase of 12% from a year ago, driven by a 23% rise in profit from banking operations.

Net interest income grew 9% to $1.51 billion in 3Q18, led by broad-based growth in customer loans of 10% and a 6 basis points rise in net interest margin (NIM) to 1.72%.

The increase in NIM was driven by improved margins in Singapore, Malaysia and Greater China, and a higher average loans-to-deposits ratio.

See: OCBC reports 12% rise in 3Q18 earnings to record $1.25 bil

As at 12pm on Tuesday, shares in OCBC are trading 21 cents lower at $11.13, some 20.3% lower than its 52-week high of $13.96 on May 2.

CapitaLand

CapitaLand reported a 13.6% increase in 3Q18 earnings to $362.2 million, even as revenue for the quarter dropped by 16.9% to $1.26 billion. The decline in revenue was mainly attributable to lower contributions from the group’s development projects in Singapore and China.

Gross profit rose 15.3% to $583.7 million during the quarter, as cost of sales decreased by 33%.

See: CapitaLand posts 14% increase in 3Q earnings to $362 mil on lower costs and expenses

As at 12pm on Tuesday, shares in CapitaLand are trading 2 cents lower at $3.13, some 19.1% lower than its 52-week high of $3.87 on Jan 30.

Genting Singapore (GENS)

Genting Singapore reported a 46% rise in 3Q18 earnings to $210.4 million ago on lower operating expenses, as revenue rose 1% to $639.1 million.

Operating profit rose 17% to $265.1 million as other operating expenses fell 97% to $1.2 million and other operating income rose 17% to $22.3 million.

See: Genting Singapore reports 46% rise in 3Q earnings to $210.4 mil on lower operating expenses

As at 12pm on Tuesday, shares in GENS are trading 1.5 cents lower at 98.5 cents, some 29.1% lower than its 52-week high of $1.39 on Jan 24.

Singapore Airlines (SIA)

SIA saw it earnings plunge 81% to $56.4 million in 2Q19, mainly due to a 40% jump in fuel prices.

Revenue for the quarter increased to $4.06 billion, as the flagship carrier reported a 4.2% increase in revenue on the back of passenger carriage growth.

See: Singapore Airlines 2Q earnings fall 81% to $56.4 mil on higher fuel prices

As at 12pm on Tuesday, shares in SIA are trading 6 cents lower at $9.39, some 20.2% lower than its 52-week high of $11.76 on May 28.

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