Singapore stock picks
From our analysts at
Phillip Securities Research
From our analysts at
Phillip Securities Research
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Financial Sector
OCBC is our preferred pick among the three banks due to attractive valuations and yield of ~6.5%, buffered by a well-capitalised 15.9% CET 1, and fee income recovery from China’s re-opening.
Earnings growth from a higher interest rate environment. Other catalysts include continued growth from derivatives volumes and fees and lower expense growth for FY23e.
Property/REIT
We forecast growth in ADRs to moderate as it has already surpassed pre-pandemic levels in some markets, and the driver for RevPAU growth going forward will be higher occupancy.
On track to launch two mass market projects despite cooling measures. Hospitality reported a 65% YOY jump in RevPAR and building recurrent income from UK commercial assets, student dorms and private rented homes.
The real estate investment and lodging management business should continue to recover on the re-opening and recovery in China. CLI is targeting at least $3bn of divestments in FY23.
Provides a stable dividend yield of 5.5% from high occupancy (99.2%), healthy tenant sales and stable rental reversions.
Professional Services
Property cooling measures will dampen volume expectations, especially from the high end. The stock is still trading at an attractive dividend yield of 7% based on an operating cash flow of S$50mn and net cash of S$139mn.
Conglomerate
Embark on asset recycling and build an asset management platform to generate recurring income. Assets earmarked for sale are its landbank in China/Vietnam/Indonesia and legacy rig assets. The proceeds could be recycled into renewable energy and infrastructure assets to be co-owned by funds and managed by Keppel CapitaLand.
We believe the sell-down is unwarranted. The proposed anti-monopoly law is to allow small-scale brewers to enter the liquor industry. Thai Beverage will still maintain its scale advantage in cost, marketing and distribution.
Consumer Staples
With record gross margins of 29% through higher prices and push towards branded products, 2Q23 net profit jumped 38% YoY to US$49.5mn.
Rise in net debt by US$505mn to US$2bn and net debt to EBITDA.
Transport
Earnings drivers from a reduction in taxi rental rebates, the introduction of platform fees for ride-hailing app (Zig) and a repricing of bus contracts in the UK.
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