Singapore - Market Strategy 01 (Nov 14 - Dec 25)

[behappyalways]

US turns on resistance - bearishness emerges in Asia


15th December: US indexes have turned on strong resistances. Shanghai passed its target and could do anything in the medium term (next few months). Hong Kong is well supported at the moment, but there are a few bearish bellwethers, such as HSBC. KLSE has topped. Thailand is in danger of topping, suggesting a few months of bearishness on the horizon.

http://asiachart.com/update15D.html

[winston]

Go Against The Flow

We are expecting the Singapore market to post a rebound after two disappointing years. While the tight labour market and the lack of productivity improvement will continue to be a drag on the economy, we see bright spots that are expected to lift the STI by 11% to 3,720, its highest level since 2007.

• Go contrarian. We believe in investing where most fear to tread, namely the offshore & marine and property sectors. The free-fall in oil prices will continue to grapple the market, although we believe that prices will recover some time before the middle of the year. This ought to set the stage for a rebound in the offshore & marine sector. As for property, the physical market is likely to remain subdued, leading to a fall in residential prices by up to 10%, in our view. We expect some cooling measures to be lifted in 2H15, which should see interest returning to this segment.

• Head for mid caps. For the past two years, we have advocated for investors to do selected stock picking in the small cap space, which have paid-off handsomely. This year, given the slump in many prominent mid caps, we believe that this segment is the sweet spot to be in.

• STI target of 3,720 based on 15x FY15F P/E.This is driven by: i) the expected positive returns from bellwether sectors, ii) productivity in Singapore turning around, and iii) attractive valuations.

• Our Top Picks.

The majority of our top BUYs are mid caps, namely CWT (CWT SP, BUY, TP: SGD2.00), Ezion (EZI SP, BUY, TP: SGD2.65), M1 (M1 SP, BUY, TP: SGD4.40), Nam Cheong (NCL SP, BUY, TP: SGD0.61) and OSIM International (OSIM) (OSIM SP, BUY, TP: SGD2.30).

For the large caps, we like DBS (DBS SP, BUY, TP: SGD22.60) and Keppel Land (KPLD SP, BUY, TP: SGD3.88), while BreadTalk (BREAD SP, BUY, TP: SGD1.90), Centurion Corp (Centurion) (CENT SP, BUY, TP: SGD0.83), Giken Sakata (GSS SP, BUY, TP: SGD0.61) and IPS Securex (IPSS SP, BUY, TP: SGD1.26) get our vote in the small cap space.

Top SELLs include Parkson Retail Asia (PRA SP, SELL, TP: SGD0.65) and Silverlake Axis (SILV SP, SELL, TP: SGD1.03).

Source: DMG

[behappyalways]

World waits as oil and euro plunge

12th January 2015: US markets have been stuck in a range for the last couple of weeks.

Oil has broken support and is heading for its previous low of around $40. Europe is testing support in the EFA chart.

Euro is likely to test support at 1.14 in coming weeks. Support is as low as 1.05 euros to the dollar! Hong Kong is looking bullish, but nothing decisive.

Similarly, Thailand has a few bullish signals, but nothing decisive. Quite likely, the world is watching and waiting to see what happens with oil.

http://asiachart.com/update12J.html

[winston]

Singapore Strategy- Watch Out For Reversal Of Yield Compression

Rising rates could lead to reversal of yield compression.

Low interest rates since the global financial crisis (GFC) in 2008 have resulted in near zero interest rates.

With the end of the US quantitative easing in Oct 14 and expectations of rising rates in 2H15, the trend of yield compression for high dividend yield
stocks could reverse.

This report highlights stocks that are potentially vulnerable.

Stocks at risk. Based on our study, stocks that are potentially at risk from the reversal of yield compression include M1, StarHub and SIA Engineering. These stocks could retreat 25-32% should the yield spread mean revert. Assuming a 70bp rise in the risk free rate, the downside is 37-45%.

Source: UOBKH

[behappyalways]

26th January: The Euro is tumbling. Possible support at the current level. But European stocks are rallying. Australia is looking rather bearish, both in the stocks and currency. Asia is turning more bullish. Hong Kong, Thailand, Indonesia, India and Philippines all have bullish signals.

http://asiachart.com/

[winston]

Singapore strategy- Tactical Trends To Trade On

Potential tactical trends to trade on.

We see several tactical trends to trade on following the recent quantitative easing (QE) by the European Central Bank (ECB) as well as the privatisation offer for Keppel Land. This report highlights our views on these trends.

M&A and deep-value developers in vogue. We believe developers trading at deep discounts to RNAV will remain in play with the recent privatisation of Keppel Land.

Stocks in this category include Wheelock, Guocoland, Wing Tai, Ho Bee, Hiap Hoe and Sim Lian.

Deep value in oil services. However, we believe investors should also look beyond the developers as other sectors such as oil services and shipyards offer deep value too. On a P/B basis, the oil services sector appears to be the most attractive, offering upside of 130% should the sector’s P/B valuation mean revert. Our key picks in oil services include Ezion, Pacific Radiance and Triyards.

Source: UOBKH

[behappyalways]

(wow so bullish...)

STI – Firm support at 3380-90, possible to reach 3530
by end-March
http://dbsvickers.ap.bdvision.ipreo.com ... 1bafed.pdf

[winston]

Singapore strategy- 4Q14 Report Card

Lower Misses - 21% of results under our coverage were below expectations vs 27% in 3Q14 and 30% in 2Q14.

Unsurprisingly, the oil services and supply chain sectors observed significant earnings downgrades.

Stay selective to outperform. We remain selective given external uncertainties and limited earnings visibility in 2015.

We favour DBS, OCBC, CapitaLand, CCT, Singtel, First Resources, CDLH-T and Wing Tai.

Within the mid-cap space, we like Silverlake, Pacific Radiance and Riverstone.

Key SELLs include IHH and StarHub.

Source: UOBKH

[winston]

Strategy - Wait for chance to long cyclicals

We ended 2014 on three themes:
1. positioning for rising interest rates,
2. a tourism recovery and
3. strong dollar.

We had a consensus overweight on banks and a non-consensus overweight on property since Nov 14.

We were rightly bullish on property names that had a catalyst (KepLand) and dollar strength proxies (Venture) but not so right on financials.

We still think that banks can do well and keep our overweight.

We turn more negative on commodities, property and upgrade transport and REITs.

Index picks are CAPL, CD, DBS, DFI, NOL, OCBC, STE and VMS.

Small-cap picks are GLL, OSIM, OUEHT, OEL, QNM, SSG, SWCH and TIAN.

Source: CIMB

[winston]

Singapore Strategy- Reading Tea Leaves For 1Q15

Assessing stocks ahead of 1Q15 results season. Ahead of the 1Q15 reporting season, which is expected to commence in mid-April, we assess sectors or stocks that could
surprise.

Possible downside risk to 2015F market EPS growth. We forecast market EPS growth (for stocks within our coverage) of 11.5% yoy in FY15F and 9.8% yoy in FY16F. Growth is expected to be driven by sectors such as aviation, banks, plantation and telecommunications.

Looking ahead, we see potential downside risk to FY15F market earnings growth as volatile sectors such as supply chain (Olam/Noble) and aviation accounts for over half of our market EPS growth forecasts.

Stay selective to outperform. We remain selective given external uncertainties and limited earnings visibility in 2015.

Using an average of LT P/B and PER valuation, we have a year-end target of 3,600.

Our key picks include DBS, OCBC, CapitaLand, CCT, SingTel, CDLH-T, Sembcorp Industries, Ezion and Wing Tai.

Within the mid-cap space, we like Silverlake.

Key SELLs include IHH, SIA Engineering and StarHub.

Source: UOBKH