This year has been flying by, and it is time for yet another new update from UOB Kay Hian Research (UOBKH) with their new Alpha Picks for November.
For October, UOBKH’s alpha picks performed well in general with these three stocks that produced exceptional performance including Memtech (+18.9% month-on-month), Wing Tai (+11.1% month-on-month), and Thai Beverage (+8.9% month-on-month).
Listed below are the new updates to the list of Alpha picks for the month.
1. GL Limited
UOBKH recommends locking in the profits from the spectacular increase in capital gains from Memtech and substituting it with GL Limited as a new stock to add to our portfolios.
GL Limited is a company that owns prime hospitality assets with over 4,700 hotel rooms in London.
UOBKH analysts are looking at the potential sales of its non-core businesses such as Clermont Casino in the UK, and Molokai, Hawaii land within the next three to six months, which will drive up its share price.
UOBKH: GL Limited (SGX: B16) – Buy; $1.185.
Singtel’s stake in Telkomsel is proving to be advantageous given that it is maintaining its “double-digit growth in subscriber base and revenue growth from voice and data”.
Furthermore, Bharti Airtel which operates in India, South Asia and Africa, is also expected to start to recover in the financial year 2019 given the industry consolidation.
It’s merging with Tata Teleservices consumer mobile business which decreases competition and helps the company to increase market share.
Analysts are expecting the announcement of a special dividend as Singtel reviews its financial results for the first half of 2018 on 9 November.
UOBKH: Singtel Limited (SGX: Z74) – Buy; $4.53.
3. Wing Tai
UOBKH analysts favour Wing Tai’s low gearing level of 2.4% which provides it with a sizeable debt headroom of $1.5 billion assuming that the market is comfortable with its gearing level rising to 50%.
These funds can be used to purchase more landbank for it to develop more properties and increase its presence in Singapore, Malaysia and Australia.
The company is also expected to start the launch of Serangoon North Avenue 1 site which was recently acquired. UOBKH prices the firm at a 25% discount to its revised net asset value.
UOBKH: Wing Tai Holdings Limited (SGX: W05) – Buy; $3.48.
With the latest plans to start providing catering services to Turkish Airlines in the new Istanbul New Airport in 2018, revenue is expected to rise for SATS.
Furthermore, SATS’s gateway services revenue is supposed to be further boosted by the substantial global cargo volumes.
Overall, UOBKH analysts prefer SATS to SIA’s shares as the latter is exposed to higher risk of volatility in fuel price.
UOBKH: SATS Limited (SGX: S58) – Buy; $5.40.
5. Thai Beverage
Thai Beverage is expected to see an increase in sales volume for the fourth quarter of the year as sellers stock up inventories ahead of excise tax increases.
Should the firm be able to increase the average sale prices to a level that exceeds the increase in excise tax, there can potentially be an increase in profit margin for the firm.
In addition, the fourth quarter of the year is likely to see an increase in alcohol consumption which will also boost the sales volume.
Overall, analysts think the current share price is still considered low since it is trading at 21.1 times price-to-earnings ratio, which is lower than the global average of 37.3 times for spirits competitors and 24.8 times for beer companies.
UOBKH: Thai Beverage Public Company Limited (SGX: Y92) – Buy; $1.09
6. Citic Envirotech
Investors can be more confident of CEL’s mid-term earnings prospects with its recent contract win of Rmb4.2 billion and analysts are expecting that there could potentially be more contract wins that could be a share price catalyst.
Given the need for access to clean water in China, CEL is an active player that can likely stand to gain from more contract wins with its impressive track record and cutting-edge technology.
Sources of growth are likely to come from river rehabilitation, sludge treatment and the increasing need for a circular economy where waste production is cut down.
UOBKH: Citic Envirotech Limited (SGX: CEE) – Buy; $1.10