RHB Group Research analyst Shekhar Jaiswal has recommended investors accumulate on Covid-19 beneficiaries in the short term.
In a May 17 report, Jaiswal says investors should rotate back into supermarket operators, industrial REITs, glove manufacturers, as well as selective healthcare operators and technology players, which he deems as “safe plays”.
To him, Sheng Siong and Kimly should be the key beneficiaries in the term.
Fellow RHB analyst Jarick Seet, on May 17, upgraded Sheng Siong to “trading buy” from “neutral” with a higher target price of $1.95 based on 23 times FY2021 price-to-earnings (P/E).
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Jaiswal has also maintained his positive stance on REITs in the short term, and recommends investors increase their exposure to the industrial and logistics REITs sub sectors.
Counters such as UG Healthcare, Riverstone and Medtecs International could benefit in the near-term on the back of higher demand for products and increased investor interest.
“While the restrictions may affect the quality of its earnings, we believe Raffles Medical will benefit from the higher frequency of swab tests and probably, more aggressive vaccinations,” he writes.
In the technology sector, Jaiswal expects Frencken and Multi-Chem to “continue delivering strong returns”.
Despite the heightened measures, Jaiswal says he remains positive on the recovery of the economy to sustain over the next 12 months. In the near-term though, financials, telecommunications, office and retail REITs, transport and consumer discretionary players are expected to underperform.
That said, for investors looking to invest longer-term, Jaiswal sees “the current share price weakness as an opportunity to buy into companies that offer structural recovery on earnings once the stringent measures are eased”.
The brokerage has kept its top picks unchanged for now.
SEE:UG Healthcare remains attractive 'buy' even as target price lowered: RHB
RHB’s alpha picks among the large-cap companies are CapitaLand, ComfortDelGro, DBS Group Holdings, Oversea-Chinese Banking Corporation (OCBC), Raffles Medical, Singapore Exchange (SGX), Singapore Telecommunications (Singtel), Singapore Technologies Engineering (ST Engineering), Suntec REIT, Thai Beverage (ThaiBev) and Wilmar.
Its alpha picks for small-cap companies are ARA Logos Logistics (Ara LOGOS), China Aviation Oil (CAO), Food Empire, Frencken, Fu Yu Corp and Prime US REIT.
Nevertheless, a “balanced investment strategy”, which offers a healthy mix of exposure to cyclical stocks as a proxy to the expected economic recovery, as well as exposure to high-yielding stocks that offer visibility on earnings and dividend growth, is key, says Jaiswal.
