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

[winston]

POSITIONING FOR MORE PRIVATISATIONS

- Expect more privatisations/takeovers
- Screening for likely candidates
- Mostly in O&M, Tech, Property, Consumer

In recent months, the Singapore market has seen a flurry of offers for listed companies, several of which have the aim of privatisation.

Indeed, we find that conditions are ripe for privatisations or takeovers, given
1) how attractive valuations are currently,
2) capital costs are still low for stronger corporates and individuals, and
3) investors still believe in the long-term prospects of Asia.

We screen for stocks that are unloved and trading with low Price/NTA ratios, and search for companies that are net cash, as well as those that have large shareholders.

We also look out for companies whose insiders have been scooping up shares recently.

To broaden the search, we also seek a list of companies that have been undertaking more share buy backs recently.

Based on our screening, companies that are more likely to be privatised or taken over include Dyna-Mac Holdings, PEC Ltd, PACC Offshore Services Holdings, Pacific Radiance, Baker Tech, Triyards, KS Energy, Mermaid Maritime, KrisEnergy, ASL Marine, Innovalues, Sunningdale Tech, Wing Tai, Wheelock Properties (S), Parkson Retail Asia, Courts Asia, Banyan Tree, CWT, Cogent Holdings and Tat Hong.

Source: OCBC

[behappyalways]

Singapore Authorities Investigating Brokers for Possible Breach
http://www.bloomberg.com/news/articles/ ... ble-breach

[behappyalways]

I am paying attention to the commodity prices, BDI index and Dow Jones Transportation Index. They seems to be doing well lately. A sudden splurge in new credit by China seems to have spur demand for these items. My guess is that this rally might have some more room to go so it might be too early to short. I am currently looking at ProShares UltraShort S&P500 (SDS) to plan my short. I might just start my first bite next month

[winston]

Monthly Strategy: Sell before May, don’t go all away

Direction of USD/SGD a decisive factor on where Singapore stocks are headed
STI – A pullback from 2965 that finds support at 2800
Take profit on these STI stocks - Genting, SembCorp Marine, Keppel Corp, SPH
Brent lower before higher – Accumulate SembCorp Industries & Ezion on Brent pullback to c.USD37pbl
Possible Singapore GDP downward revision. The final figure for Singapore 1Q GDP will be released on 19 May. We see downside risk to the advance GDP figure of +1.8% y-o-y given recent weak manufacturing and export data.


Watch the Dollar. The USDSGD's direction will be an important factor in deciding where Singapore stocks may be heading next month. The outcome of this week’s FOMC meeting will set the tone. Fund inflows to this region could come to a screeching halt if the FED turns more “hawkish” and the USD strengthens.

However, should the FED continue to paint a “cautious and data dependent” approach, the USD will stay pressured and the Singapore equity market is likely to remain buoyant despite the uninspiring 1Q corporate results season.


Blue chips rally likely to pause in May. STI now trades at slightly above the 12.09x (-1SD) FY16/FY17 PE level of 2900. Further upside for the STI beyond 2965 is hard to justify unless the USDSGD continues its decline. Furthermore, stock prices could pullback with many stocks going XD soon.

Upside looks limited, another pullback looks due. We peg a range of 2800 to 2965 till end-May with support along the way at c.2860.


Take profit on selective blue chips. Take profit on Genting Singapore, SembCorp Marine(SMM), Keppel Corp(KEP) and SPH as these stocks have risen beyond our fundamental TP. Recent negative turn of events for rigbuilders - Sete Brazil filing for bankruptcy protection and Marco Polo granted the stay of proceedings in its legal tussle with SMM - will cause a share price overhang on these stocks.


Accumulate SCI and EZION on Brent pullback, SIE on potential dividend upside. Brent could weaken to the USD35-40pbl range before a gradual recovery beyond. Our technical view for Brent is a pullback to c.USD37pbl before another up move to USD55pbl before year-end.

We look to selectively accumulate O&M stocks on Brent pullback, our picks are SembCorp Industries and Ezion. SIA Engineering could provide dividend upside on the release of its final results.

Source: DBS

[winston]

Value, risk and strategy in Singapore equities

by Matein Khalid

I cannot recommend Singapore banks due to their alarming exposure to China, energy and commodities.

The property market is in a downcycle and office Reits will be hit hard as banks like StanChart/RBS shrink space usage and renegotiate leases even while Khazanah and Temasek add more than two million sqft of fresh office space to a glutted CBD market.

The next Singapore double/triple baggers are in Southeast Asia's exciting e-commerce revolution as smartphones and online shopping converge with a vengeance.

The obvious e-commerce proxy on the SGX is Singapore Post, given its new Alibaba platform, though the valuation is expensive at 22 times earnings.

A far better option is another Temasek originated logistics/warehouse operator Mapletree Logistics Trust.

Cambridge Industrial Trust has also fallen from S$0.72 to S$0.52 now, cheap at 0.84 times NAV and offering a 8.5 per cent dividend yield with a diversified tenant base and seven year maturity leases, low refinancing risk and stable cash flows.

Source: Khaleej Times

http://www.khaleejtimes.com/business/ec ... e-equities

[winston]

This important valuation signal says it's time to buy Singapore stocks

BY KIM ISKYAN

Over the past 30 years, whenever the P/B ratio of the Singapore stock market has fallen to 1 or less, the market has rallied sharply.

Source: SBR

http://sbr.com.sg/markets-investing/com ... FBese.dpuf

[winston]

STRATEGY

We have been defensive and stock selective, buying on weakness and preferring solid blue chips with dividend yields and strong financials.

Valuations look fair, with the FSSTI trading at 2016F PE of 14.5x, or at a 6% discount to LT mean valuation of 15.4x.

Valuations are likely to remain below mean on weaker growth prospects and lower-than-mean ROE, with GDP growth at the lower end of the 1-3% range.

Investment themes for 2H16 include:
a) M&A fever,
b) dividend yield with catalyst,
c) recovering tourist arrivals, and
d) going global.

On our BUY list are DBS, CDL, Singtel, STE, A-REIT, CDREIT and Bumitama.

Mid-cap gems we like include CAO, NeraTel, Valuetronics and Innovalues.

SELL SIAEC, StarHub and M1.

Source: UOBKH

[winston]

Portfolio: We’re selling all our stocks

By Benny Tan

We think the next several weeks are going to be very volatile for stocks. Top officials at the US Federal Reserve have been making extremely hawkish statements recently, suggesting that interest rates are about to be pushed higher. However, the very disappointing US jobs report for May out on Friday night puts a question mark over the health of the US economy, and could now force the Fed to stay its hand for a few more months.

Also, the looming Brexit referendum in the UK has the potential to stir up significant volatility across global markets. After an internal debate, we’ve decided to completely unload the holdings of our three portfolios.

This isn’t a statement on the micro fundamentals of our holdings, and it doesn’t mean that we’re expecting some kind of financial market Armageddon ahead. Instead, we think that global markets are at a major crossroad. And, after a big sell-off that might lie ahead, we think a new perspective will be needed to find the most promising stocks.

Going completely to cash now will enable us to honestly question our long-held assumptions about the market as well as key sectors and individual companies.

Source: The Edge

http://smr.theedgemarkets.com//article/ ... 3-87358173

[winston]

Four themes to ride the cycle

1.Catch the travel bug. Bottoming signals are emerging for Singapore tourism, driven by strong recovery in Chinese and Indonesian arrivals. Coupled with lesser pressure from new room supply ahead, we expect tourist arrivals to grow by 5% this year, arresting the decline in Revpar. TOP picks are CDL Hospitality Trust, OUE Hospitality Trust and Singapore Airlines.

2.Growth at reasonable pricing. Small caps are the brighter spots, with earnings growing at 22% vs 4% for big caps this year. Our preferred picks are small caps in niche segments - mm2 Asia, Cityneon Holdings, Jumbo Group and Japfa Ltd.

3.Sustainable yields. Singapore remains an attractive haven for dividend yield plays, backed by an attractive payout ratio of 55% and dividend yield of 4%. We like M1, Sheng Siong Group, ARA Asset Management and ST Engineering.

4.Survival of the fittest. When the going gets tough, the tough gets going. We seek companies with a solid strategy, good management and track record to overcome ongoing challenges to emerge stronger for the next cycle- Ezion Holdings, Sheng Siong Group, ST Engineering, Sembcorp Industries, Singapore Airlines, Yangzijiang Shipbuilding, and SATS.

Source: DBS

[winston]

Singapore Strategy And Mid-Cap Marketing Feedback

Our recent marketing trips to Taiwan and Malaysia suggest that investors should remain selective in Singapore given the lack of earnings clarity and an uncertain external outlook.

The market could range trade and we would look to stock picking to outperform.

Keen interest in selected mid-caps.

Investors were keen about hearing our top picks for mid-caps.

China Aviation Oil (BUY; Target: S$1.56) garnered the most interest followed by Innovalues and Cityneon.

CAO saw a lot of interest given its compelling business model with a monopoly in China’s jet fuel import market, which makes it an
excellent proxy to the booming aviation sector in China. Equally impressive, was its strong corporate governance as well as risk management practices, which has been put in place by its strategic shareholder BP (which has a 20% stake).

Innovalues and Cityneon enjoyed selective interest. M&As look active in Singapore and Innovalues could be a beneficiary as sector consolidation makes it an attractive candidate.

Source: UOBKH

https://research.uobkayhian.com/content ... 8e3d81af19