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Maybank Kim Eng analysts Thilan Wickramasinghe and Lai Gene Lih say they see the current volatility in markets brought about by the latest spate of infections as opportunities to “buy the dip”.
“This creates opportunity in a market that has re-rated 18% in 12-months, we believe,” they write.
On this, they have identified “conviction names” such as Ascendas REIT (A-REIT), ComfortDelGro (CDG), DBS, Frencken, Mapletree Logistics Trust (MLT), OCBC, Q&M, Raffles Medical, Thai Beverage (ThaiBev) and UMS, with “buy” calls across the board.
The picks, say Wickramasinghe and Lai, are “largely value stocks where clear structural drivers are set to deliver EPS, yield expansion”. These counters are from the banking, land transport, consumer, technology and healthcare sector, as well as from the industrial REITs subs-sector.
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The banks are driven by external growth, reserve writebacks, higher dividends, while the land transport sector is due to better operating leverage and restructuring.
Consumer stocks share growth and rising “at home” consumption while technology stocks see new products and can be used as a play on chip shortages.
There is growth in the healthcare sector due to the increased amount of Covid-19 testing, while industrial REITs are growth sectors in e-commerce, logistics and rising distribution per unit (DPU) visibility.
In a May 17 report, the analysts say that current restrictions imposed by the Singapore government could affect frontline domestic demand sectors such as food & beverage (F&B) and retail, but are unlikely to derail GDP growth for the country.
The sectors, which make up only 2.4% of Singapore’s GDP, are now better prepared compared to the previous circuit breaker, with increased digitalisation, delivery logistics and government support.
“The larger drivers for economic growth are external: semiconductor manufacturing, pharma, exports, finance, infocommunications services,” write the analysts.
SEE:CGS-CIMB keeps 'overweight' on Singapore banks with UOB being its sector pick
“These are driven by global growth particularly from recovering US, Europe and North Asia. Indicators here remain robust,” they add.
As such, the economic team at Maybank Kim Eng is maintaining their GDP forecasts for the FY2021 to be at +6.2%.
“We maintain our 12-month STI target of 3,537 for 15% upside. Stricter social measures, extension of lockdowns and lower than expected global recovery are downside risks,” they write.
The STI closed 8.08 points or 0.3% up at 3,117.89 on May 21.
