With 2Q2017 out, we saw a mix of misses and beats but were generally filled with disappointments. Capital goods and small caps took the heaviest hit and are far from a turnaround.
Continuing deterioration of asset quality from the oil and gas sector is also putting pressure on the banking sector.
Meanwhile, consumer sector has been facing a strong threat from the eCommerce sector and has added supermarkets to the list of impacted.
With the introduction of Amazon Prime Go, supermarkets such as Dairy Farm and Sheng Shiong might see their revenue falling.
Here are three sectors and the respective stocks to buy in those sectors as highlighted in CIMB Research‘s report.
Not all is gloomy. As the property market recovers, developers are performing better with good sell-through rate in Singapore.
CDL came in below expectations of the street despite a pickup in residential sales volume. That is due to the offsetting effect from its hotel segment that continues to underperform.
Better operating condition, revaluation gains and divestment gains have led to CapitaLand’s earnings to be on the higher end of the expectations of analysts.
Strong take up rate was seen in its residential properties in both Singapore and China. 94% of its units that were launched in China was sold in 2Q2017.
In addition, its retail and serviced apartment arms in China and US held up well. More information about CapitaLand can be found in the article here (http://aspire.sharesinv.com/50116/dissecting-capitaland-subsidiaries-associates-that-might-be-attractive/).
Analysts from CIMB Research gave CapitaLand Limited (SGX: C31) a “Buy” call with a target price of $4.21.
However, UOL remains the top pick of the property sector. It is well liked for its diversified earnings and exposure to Singapore’s residential and commercial segment which makes up for 70% to 75% of its assets.
Analysts from CIMB Research gave UOL Group Limited (SGX: U14) a “Buy” call with a target price of $9.03.
On 2Q2017, Genting Singapore beat consensus estimates for the third consecutive quarter on the back of better cost control measures.
They were also luckier as they achieved a better win rate of 3.0% compared to last quarter’s 2.95%. This luck helped them cushion the loss of a 1.0% market share in the VIP rooms to Marina Bay Sands.
The management’s effort in growing the mass market segment paid off with its market share growing from 38% to 40%.
Analysts from CIMB Research gave Genting Singapore PLC (SGX: G13) a “Buy” call with a target price of $1.35.
Tech and manufacturing
Singapore’s technology and manufacturing sector has showed strong performance with increased orders and sales across segments. There are two stocks that were picked out as the top choice of the industry that investors should look at.
Semiconductor and precision engineering firms are leading the pack with an increase in demand globally. AEM saw its equipment systems business grew 264% year on year (YoY).
Analysts from CIMB Research gave AEM Holdings Limited (SGX: AWX) a “Buy” call with a target price of $3.43.
Valuetronics posted a 46% YoY growth in sales of its consumer electronics and industrial & commercial electronics segments. Its strong balance sheet and projected dividend yield of 3.9% is worthy of a mention as well.
Analysts from CIMB Research gave Valuetronics Holdings Limited (SGX: BN2) a “Buy” call with a target price of $1.02.