SINGAPORE (June 1): As Singapore begins to ease the circuit breaker (CB) measures starting with Phase 1 on June 2, several stocks and real estate investment trusts (REITs) could emerge as beneficiaries.

This includes retail REITs, such as CapitaLand Mall Trust, Frasers Centrepoint Trust, Mapletree Commercial Trust and Lendlease Global Commercial REIT, according to DBS Group Research.

ComfortDelGro Corp could also be a beneficiary as the “worst is over” for the public transportation company after two rounds of earnings cuts on taxi rental rebates, it says.

Other beneficiaries are F&B operator Koufu Group, alcohol beverage manufacturer Thai Beverage and agribusiness company Wilmar International, it adds.

“While the CB will be eased in phases, the latest news that Phase 2 of CB easing could begin as soon as mid-June, which is two-to-four weeks earlier than anticipated should underpin CB easing beneficiaries,” DBS analysts Yeo Kee Yan and Janice Chua write in a June 1 note.

mute
Meanwhile, travel and aviation-related stocks and REITs could also be beneficiaries, says DBS, albeit on a gradual basis.

This comes as Singapore and China have agreed to allow essential travel for business and official purposes between the two countries from early June.

This will begin with Shanghai, Tianjin, Chongqing, Guangdong, Jiangsu and Zhejiang and gradually expand to other Chinese provinces or municipalities.

“It’s a small but important first step that should expand to more countries and lift the near rock bottom sentiment for the beleaguered hospitality and aviation sector,” say Yeo and Chua.

DBS’ preferred picks are Far East Hospitality Trust, Ascott Residence Trust and CDL Hospitality Trusts.

Airline caterer SATS is another beneficiary, it adds, as plans are underway to gradually allow transit travellers through Changi Airport going forward.

Still, DBS has initiated a “steep cut” of 20.9% in its earnings per share (EPS) forecast for the Straits Time Index (STI) this year.

The reduction was the result of the 1Q earnings drag that came from many STI constituents, it says.

These constituents are United Overseas Bank, Oversea-Chinese Banking Corp, Genting Singapore, ESR REIT, Singapore Post, ComfortDelGro, Singapore Technologies Engineering, Sembcorp Industries, Dairy Farm International Holdings and Venture Corp.

However, the STI’s EPS could grow 16.5% in FY21 on the back of a low base effect, DBS says.