Singapore’s reopening continues to gain ground, says CGS-CIMB Research analyst Lock Mun Yee, putting SIA Engineering Company (SIAEC), Singapore Post (SingPost) and SingTel in good stead for the coming months.
“Sectors that will benefit include retail and office landlords, transport and those tourism-related as well as hospitality,” writes Lock.
In an April 25 note, Lock is maintaining “add” on all three companies, with target prices of $2.92 for SIA Engineering, 90 cents for SingPost, and $3.30 for SingTel.
Other preferred reopening plays include CapitaLand Integrated Commercial Trust (CICT), Lendlease Global Commercial REIT (LREIT) and Ascott Residence Trust (ART).
“We continue to like stocks that are exposed to the relaxation of domestic safe management measures and reopening of borders. Among the retail and hospitality trusts, our preferred picks are CICT, LREIT and ART, to play the reopening theme,” writes Lock.
She adds: “With SATS’s and Singapore Airline’s (SIA) recent share price outperformance, near-term upside appears limited. We switch our preference to SIA Engineering, Singtel and SingPost. Downside risks include emergence of new Covid-19 variants that could derail a speedy recovery.”
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From April 26, Singapore’s relaxed protocols include the removal of the 10 pax limit to group sizes and the number of unique visitors per household; all employees may return to the workplace and masks may be removed at the workplace when not interacting physically with others and when not in customer-facing areas; safe distancing will no longer be required between individuals/groups; and capacity limit of 75% will be lifted for all settings/events, except for nightlife establishments, where dancing is one of the intended activities.
Further easing of travel restrictions was also announced, with pre-departure tests no longer required for fully-vaccinated travellers, including those aged 12 years and below, when entering Singapore.
“We believe allowing more workers to return to the workplace should continue to bolster foot traffic at downtown malls and boost ridership on public transport,” says Lock.
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This should benefit retail and office landlords, such as CICT, LREIT, SPHREIT, Starhill Global REIT (SGREIT) and Keppel REIT (KREIT), as well as transport operators, such as ComfortDelGro and SBS Transit.
Meanwhile, lifting of the 75% capacity for larger events should be positive for hotel operators, such as hospitality trusts, as well as Suntec Convention Centre.
Lock believes traffic recovery should gain momentum going forward. This should bode well for tourism-related stocks, such as SATS, Singapore Airlines, SIA Engineering, CDL Hospitality Trusts, Far East Hospitality Trust, ART, Singtel and Starhub, as well as Genting Singapore and SingPost.
On the flipside, there are potential downside risks to contributions from Covid-19 services for healthcare providers like Raffles Medical Group and Q&M Dental Group, partly mitigated by pre-event ART testing due to the resumption of nightlife businesses and outbound travel, notes Lock.
As at 12.09pm, shares in SIA Engineering are trading flat at $2.71; while shares in SingPost are trading 0.5 cents higher, or 0.7% up, at 72 cents; while shares in Singtel are trading flat at $2.77.
Photo: Bloomberg
