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

[winston]

SG STRATEGY – IS IT TIME TO LOOK AT DIVIDENDS?

Recent corporate report cards showed that there were still glimmers of hope despite global economic gloom as several Singapore listed companies beat market’s reduced earnings expectations and rewarded shareholders with better dividends or one-off special dividends.

Of note is DBS’s mammoth SGD2.00 total dividend per share (DPS) for FY22, giving an attractive dividend yield of 6.0% based on the closing share price on 10 Mar 2023. This included a special dividend of SGD0.50 and lifted FY22 DPS YoY growth to a staggering 67%.

While most Straits Times Index (STI) companies were not able to match DBS’s eye-catching FY22 payouts, dividend yields for these companies are also commendable.

For example, based on the payout of SGD0.33, Keppel Corp’s current dividend yield is 6.0%. As for ComfortDelGro, with a total DPS of SGD0.08 in FY22, the dividend yield works out to be 7.1%.

While dividend distribution is highly unpredictable and dependent on economic outlook and specific company’s performance, big-cap companies tend to offer a steady stream of annual dividends or clearly articulated annual dividend payout policies.

With current weak market sentiment, this could throw out some buying opportunities to accumulate at lower price levels for longer term holdings.

Within our Singapore coverage list, companies with attractive FY22 dividend yields include City Developments (3.8%), ComfortDelGro Corp (7.1%), DBS (6.0%), Keppel Corp (6.0%), Singapore Technologies Engineering (4.7%), United Overseas Bank (4.7%), Venture Corp (4.4%) and Wilmar International (4.3%).

FY22 results saw some companies dishing our special dividends
Dividend yields of 4-7%
Focus on big-cap companies

Source: OCBC

[winston]

Stay Nimble

We think the Singapore market remains a safe harbour, with projected earnings growth of 15.8% and decade-high projected dividend yield of 5.2% in CY23F.

We advocate investors to stay nimble amid near-term market volatility driven by data.

Upgrade capital goods sector to Overweight on strong earnings outlook, particularly for SCI and STE, while the completion of the SMM-KOM merger and index inclusion could catalyse a return of investor attention to the enlarged SMM.

We turn Neutral on Tech with evident margin pressure and concerns over excess inventory being a drag in 1H23F.

Against a volatile data backdrop, property/REITs may trade range-bound until clearer signs of peaking rates spur a rebound, which we anticipate to happen towards early-2H23F.

Our top big-cap picks are SCI, STE, CLAR, CICT, CLI, GENS, RFMD, THBEV, UOB,
ST.

Our small-cap choices are BOCS, DELFI, CAO, YZJFH, PROP.

Key risks to our view include a higher- and longer-than-expected rate hike cycle that could further derail corporate earnings growth and knock-on impact from recession risks in the US
and Europe.

Source: CIMB

[behappyalways]

Intraco, Jadason Enterprises etc to be placed on SGX’s watch-list after losses in the last three financial years
https://www.theedgesingapore.com/news/c ... cial-years

[behappyalways]

Liquidity risks low for Singapore banks though funding costs will rise in 2H2023: Bloomberg Intelligence
https://www.theedgesingapore.com/news/b ... ise-2h2023

[behappyalways]

Shell Seeks to Exit Petrochemicals in Singapore
https://www.plasticstoday.com/business/ ... -singapore

[winston]

Alpha Picks: Adding SIE, CSE And REXI While Removing MLT

Our Alpha Picks portfolio continued its market-beating run in Jun 23, beating the STI by 2.9 ppt
on an equal-weighted basis, helped by industrial stocks.

Our portfolio’s performance on a qoq basis was even better, bettering the STI by 8.8ppt.

For Jul 23, we add SIE and CSE due to favourable tailwinds while also including REXI as a SELL
call.

Our Alpha Picks portfolio has now beaten the STI in 15 out of the past 16 months.

Source: UOBKH

https://research.uobkayhian.com/content ... af48e6e558

[winston]

STRATEGY – SINGAPORE
Alpha Picks: Adding CD, SEA, BAL And LHN While Removing SIAEC, REXI And LREIT

Starting off strong for 2H23, our Alpha Picks portfolio was yet again positive in Jul 23,
making it seven consecutive months in 2023.

Driven by our O&G-related picks, our Alpha Picks portfolio beat the STI by 1.6ppt on a market cap-weighted basis.

Our Alpha Picks portfolio has now beaten the STI in 16 out of the past 17 months.

For Aug 23, we add CD, SEA, BAL and LHN, backed by favourable tailwinds and strong earnings
outlook.

We have also removed SIAEC, REXI and LREIT from our Alpha Picks portfolio.

Source: UOBKH

https://research.uobkayhian.com/content ... 1cd8ac9b3a

[winston]

In a defensive mode

Earnings beats continued to outpace misses in 1H23, although by a smaller margin. However, the STI declined 2.7% during the Jul-Aug results season, dragged down by macro headwinds.

Five sectors saw upwards adjustments in FY23/24F earnings with the transport and gaming sectors seeing the largest revisions.

We see a slew of event-driven catalysts over the next 6-9 months for the tourism-related sectors.

Despite the earnings upgrades, share prices of tourism-related stocks such as GENS, CD and CLAS
had declined, offering investors attractive entry opportunities to ride on this uptrend.

Furthermore, given the current uncertain macro environment, we believe investors would prize earnings certainty derived from a strong orderbook with more possible earnings upside from margin expansion. In this regard, we would advocate investors to look at orderbook-driven companies in the capital goods sector.

Our big-cap conviction picks are CD, CLAS, CLAR, GENS, THBEV, UOB, STE, STM and YZJSGD.
Our small cap picks are CENT, CAO, CSE and UMS.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 4325a860b4

[winston]

Reflections 2023

This year’s big themes are key opportunities for SG 2023 is the year experts got wrong.

Forecasts on interest rates, inflation and valuations underwent big gyrations throughout the year.

Yet amidst these macro deviations, we saw major thematic developments that could influence medium-term earnings and valuations across sectors.

Key amongst these is the accelerated adoption of GenAI, coupled with rising demand for 5G and IoT.

Separately, China’s economic re-opening was worse than expected. Yet it has created positive spill-overs for Singapore.

Concurrently, armed with strong balance sheets, local corporates are fast expanding their regional footprints.

Taken together, we think these developments could introduce new income streams and drive better efficiencies.

Key winners: CD, DBS, FRKN, RFMD, SCI, Singtel, STE, VMS.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/354053.pdf

[winston]

STRATEGY – SINGAPORE
Searching For Golden Needles In The Haystack

While we forecast a modest 2.4% EPS growth for 2024, we nevertheless see a number of
stocks within our universe that should deliver strong returns, backed by sustainable
dividend yields.

On a top-down basis, our 2024 year-end target of 3,290 for the STI implies 6% upside from current levels, with the index’s current valuation looking inexpensive at 2024F PE and P/B of 9.9x and 1.0x respectively.

Our top large-cap picks are CLI, CD, FR, GENS, MINT, OCBC, SATS, STM, SCI and VMS.

Source: UOBKH

https://research.uobkayhian.com/content ... b0934b3fe9