Last quarter, we have written an article on the top three yielding counters on the Straits Times Index (STI), based on the yield monitor report of the Singapore market from OCBC Investment Research (OIR). This quarter, we will also be highlighting the 4Q15 update on the top three yielding counters on the STI.
In the latest report, the top three components remain the same but their positions have shuffled. Ascendas REIT (AREIT) and Noble Group (NOBL) swapped positions with NOBL now in second and AREIT in third place.
1) Hutchison Port Holdings Trust
Hutchison Port Holdings Trust (HPHT) continues to hog the first place of the list. This is despite the falling forecast of its yield for several consecutive reports. Its projected yield lost another 0.2 percentage points to 7.9 percent.
Price of the stock remains unchanged despite the fall in projected yield. This is mainly attributed to the weak sentiments from US and Europe that has caused a drop in outbound cargoes volumes handled by the ports.
Recommendations from analysts remain largely the same with four “Buy”, seven “Hold” and two “Sell”. There are three less “Hold” compared to the previous article as they stopped coverage on the share. DBS Vickers Research gave HPHT a “Buy” call with a potential upside of 11.5 percent.
2) Noble Group
Noble Group (NOBL) turned slightly better after receiving support from banks. It has recently closed a US$ 1.1 billion revolving credit facility led by six banks. This is a display of confidence by financial institutions after attacks from multiple short sellers this year.
Compared to the time when the last article was written, the share price of NOBL increased to $0.54 from $0.51. Projected dividend yield fell to 6.2 percent from 6.4 percent; losing 0.2 percentage points.
Coverage for the stock fell strongly from the previous 25 coverage to the current 13. At the moment, NOBL has five “Buy”, seven “Hold” and one “Sell” calls from the street. Analysts from Jefferies Equity Research are extremely bullish about NOBL and gave it a target price of $1.30.
3) Ascendas REIT
Ascendas REIT (AREIT) swapped position with NOBL as projected yield continues to slip. This came as the price of the share rose to $2.50 from the previous $2.20 that caused yield compression. The threat of a rising interest rate has not kept yield driven investors from AREIT. Projected yield for AREIT is currently on par with NOBL standing at 6.2 percent.
Coverage from research houses has shown that they are holding a positive sentiment towards the REIT. “Buy” call increased from 11 to 14, “Hold” decreased from 9 to 12 while “Sell” remains at 2. OIR gave AREIT a “Buy” call with a target price of $2.58.
Disclaimer: The writer of this article is vested with interest in Noble Group.