Don't let your investing guard down in 2019, says RHB

Don't let your investing guard down in 2019, says RHB

By: 
Michelle Zhu
26/12/18, 11:48 am

SINGAPORE (Dec 26): RHB Research is targeting 3,300 for the Straits Times Index (STI) by end-2019 and advises investors to remain defensive amid anticipated volatility in the year ahead – by focusing on buying stocks that offer stable earnings, strong balance sheets and sustainable dividends.

The research house’s caution comes despite inexpensive overall market valuations, in the research house’s view, with the STI trading at 12.7 times its one-year forward P/E at the -1SD band as at the close of Dec 13.

In a Dec 14 report, RHB says that while it expects “compelling valuations” and moderate appreciation of the SGD to bring long-term investors back into the market, it prefers defensive sectors as well as to focus on a bottom-up stock picking strategy for 2019.  

RHB is forecasting 2019 GDP growth to ease to 2.8% from 3.2% this year, and expects Singapore’s equity market to remain volatile amid uncertainties over trade tensions between China and US. The consumer and industrial remain the research house’s preferred sectors for their tendency to outperform the broader market.

“In both sectors [consumer and industrial], we prefer companies that offer earnings growth visibility and/or sustainable high dividends. Sheng Siong and Wilmar International are our top consumer picks, while we like ST Engineering amongst industrials on revival of its profit growth,” says RHB. 

Sheng Siong and Wilmar have been given the respective target prices of $1.27 and $3.58, while ST Engineering has a $3.97 target price.

RHB also remains “overweight” on banks for its high growth and dividend yields despite slower loan growth of late, with UOB as his preferred sector pick for its more-reasonable valuations and the likelihood of a higher dividend payout. RHB’s target price for the bank is $30.80.

Among Singapore REITs (S-REITs), the research house prefers industrial and hospitality REITs which are beneficiaries of improving economic activity and with strong balance sheets. Ascendas REIT (A-REIT) and CDL Hospitality Trust (CDL HT) are the top “buy” picks in this space with target prices of $2.90 and $1.80, respectively.

Lastly, out of the small and mid-cap stocks under RHB’s coverage, Silverlake Axis, HRnetgroup, FuYu Corp and Singapore Medical Group (SMG) are expected to deliver strong returns in 2019. These stocks come with target prices of 65 cents, $1.18, 23 cents and 56 cents, respectively.

“Singapore’s economic growth is highly dependent on exports, as evident from the fact that its total trade is more than two times the country’s GDP. An escalating trade war between China and the US would have a direct impact on Singapore’s economy and in all likelihood, STI earnings growth as well. A prolonged trade war will hurt economic growth and result in further cuts to corporate earnings, which could be negative for the Singapore market,” concludes RHB.  

UOB and KrisFlyer launch credit card for pairing with savings account to earn air miles from spending

SINGAPORE (Apr 23): United Overseas Bank (UOB) and KrisFlyer have launched the KrisFlyer UOB Credit Card. This is a credit card which can be combined with a savings account to earn bonus KrisFlyer miles when customers spend and save. With the KrisFlyer UOB Credit Card, cardmembers will earn three KrisFlyer miles on their everyday spending, such as on dining and online food delivery, online shopping and public transport. KrisFlyer is Singapore Airlines Group’s frequent flyer programme. According to UOB and KrisFlyer, these everyday spend categories were chosen as they were the fas....
Read More >>

ComfortDelGro deepens footprint in Australia with A$28.3 mil bus acquisition

SINGAPORE (Apr 23): ComfortDelGro Corporation announced Tuesday it is acquiring Australian bus service operator B&E Blanch for A$28.3 million ($27.5 million). B&E Blanch, which has a fleet of 48 buses and coaches, runs scheduled route and school bus services in New South Wales (NSW). The company operates as Blanch’s Bus Company and Brunswick Valley Coaches. The latest acquisition is ComfortDelGro’s sixth acquisition in Australia in the last 12 months, and its fifth in NSW. ComfortDelGro says the purchase consideration, which is approximately 7.6 times EBITDA, will be ....
Read More >>

UIC posts 35% higher 1Q earnings of $81 mil on higher contribution from associated companies

SINGAPORE (Apr 23): United Industrial Corporation (UIC) declared earnings of $81.1 million for 1Q19, 35% higher than $60.2 million in 1Q18. This came on the back of a 12% increase in revenue to $185.3 million from $165.7 million a year ago, mainly due to higher sales of trading properties with higher sales achieved for the group’s residential development projects; higher contribution from investment properties; and higher contribution from information technology operations. The group’s hotel operations remained stable. As cost of sales also increased by 17% y-o-y to $105.5 million, g....
Read More >>