Investors who are looking out for new stocks to invest may want to consider taking a look at these three stocks that OCBC Research has just reviewed which are poised to do well.
Digitalisation has become so pervasive in our everyday life, from Singapore working to becoming a cashless society, to the fact that most people probably cannot imagine living without wifi.
Singtel has been branded as the “beneficiary of the new digital economy”, with an increase in operating revenue of 8.3% year on year for the first quarter of 2018.
That has been a result of increased revenue from the acquisition of Turn Inc in April 2017, further boosted by increased equipment sales, data and internet, and Information Communication Technology (ICT) services.
Earnings before interest, tax, depreciation and amortization (EBITDA) also grew by 2.7% year on year because of the higher revenue coupled with better cost management.
Investments in content, ICT capabilities, and network expansion brought down the EBITDA, and in the long term, the increased capital expenditure should contribute to bringing up profits.
However, as underlying profits from associates came down by 2.5% year on year with weak Airtel results from India, underlying total net profit (excluding exceptional items) actually came down by 3.5% year on year.
That has contributed to the recent decline in Singtel’s share price, which makes it more attractive to enter the market now at the lower price.
With an exposure to potential growth industry like cyber security through Trustwave, digital marketing with Amobee and turn, and data analytics (DataSpark), Singtel is well poised to benefit from the transition into a completely digitalised economy.
OCBC Research has remained positive over Singtel’s diversified portfolio and its increased exposure in the expanding ICT space, and reiterates their position to buy Singtel Limited’s (SGX: Z74) shares, with a fair value of $4.19.
Identifying Indonesia as a growth market with increasing domestic consumption, CapitaLand is committed to investing $300 million in the country.
The first integrated development is expected to be complete (The Stature Jakarta) in 2020 and the property developer is also investing in a 192-unit serviced residence (Ascott Sudirman Jakarta).
The Ascott Sudirman Jakarta is close to completion and expected to open in 2018. With that addition, CapitaLand will have around 600 units of serviced residences in Indonesia, making it the largest serviced residence operator in Indonesia.
As CapitaLand continues to expand its presence in Indonesia, the country’s steady economic growth and rising middle class should be positive factors that will help to increase the group’s revenue.
OCBC maintains a buy on CapitaLand Limited (SGX: C31) with a fair value estimate of $4.13.
3. DBS Holdings
DBS has recently announced that it will convert its Indian franchise into a wholly-owned unit with 75 to 90 branches opening shortly. That move is only possible after DBS received approval to do this from the Reserve Bank of India, and is likely to help DBS strengthen its presence in India.
Recently, DBS has been hit by a weak outlook for oil and gas stocks. With a lower price for entrance, investors may want to consider accumulating this stock to benefit from the future growth streaming in from increased presence in India.
As such, OCBC Research has a HOLD call for DBS Holdings Limited (SGX: D05) with a target price of $22.50, but $21.00 is a good entry price to capitalise on the stock price weakness.