UOB Kay Hian has added Aztech to its alpha picks portfolio for February as the Singapore research team believes the counter has been oversold.
“We add Aztech as we believe its share price correction presents a good buying opportunity given that it has a strong orderbook and operations remain intact,” writes the team in its Feb 3 report.
In addition, Aztech’s upcoming results for the FY2021 ended Dec 31, 2021, are expected to be robust, and its current share buyback mandate should support its share price. The company will post its results after market closes on Feb 22.
Analyst John Cheong has recommended “buy” on Aztech with a target price of $1.55.
The counter is currently trading at seven times FY2022 price-to-earnings (P/E), which is “unjustified” compared to its peers’ trading at above 10 times.
“We continue to like Aztech as it is a proxy to high-growth IoT products, where we believe orders are just starting to ramp up in 2021 and would sustain into 2022,” says Cheong.
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The brokerage has also added Thai Beverage (ThaiBev) to its portfolio after dropping the counter for the month of January.
“For Thai Beverage, we are positive on Thailand’s international tourism revival and the expected boost to consumption volumes. Sales data showed strong numbers for November 2021,” writes the team.
Analyst Llelleythan Tan has also rated ThaiBev “buy” with a target price of 92 cents.
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“We believe that the potential IPO of ThaiBev’s beer business may unlock value for the group in 1HFY2022. Conservatively, we value the beer business at roughly US$5 billion ($6.74 billion) using 13 times FY2022 EBITDA,” he writes.
The valuation is relatively small compared to Tsingtao Brewery Company’s valuation of US$16 billion, Budweiser Brewing Company APAC’s US$35 billion and Asahi Group Holdings’ US$21 billion, adds Tan.
Meanwhile, UOB Kay Hian has removed ComfortDelGro (CDG) and Uni-Asia from its alpha picks portfolio.
“While we had positioned ComfortDelGro as a re-opening play, its share price performance has been disappointing and thus we have elected to cut loss on this stock,” says the team.
Despite its bullish sentiment in the longer term, the team adds that it does not see any share price catalysts for the near-term.
There are no meaningful share price catalysts deemed for Uni-Asia either, says the team. The counter also suffers from a lack of market liquidity.
‘Weak start to 2022’
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UOB Kay Hian’s alpha picks portfolio began 2022 with a “weak start”, with the portfolio declining 1.8% month-on-month (m-o-m) on an equal-weight basis in January. This is compared to the performance of the benchmark Straits Times Index (STI), which rose 4.0% m-o-m.
“Our portfolio was hurt by REITs and small caps, with Frasers Logistics & Commercial Trust (-9.9% m-o-m), Lendlease REIT (-8.4% m-o-m) and Uni-Asia (-8.9% m-o-m) being the main underperformers,” writes the team.
On the other hand, the brokerage’s portfolio outperformers were OCBC at +9.4% m-o-m, BRC Asia at +5.8% m-o-m and Singapore Telecommunications (Singtel), which rose 4.7% m-o-m.
Despite the decline in REITs, the team says it remains “bullish on selective REIT sub-sectors and thus have not changed our stock calls”.
Photo: Bloomberg
