With 2017 coming to a close, it is time to relook and review your portfolio once again. For some, this is a once in a year exercise that could make or break their investment performance. Thus, it is a grand exercise that requires all the research you can find to help you make the best investment decisions.
To aid your search for the most suitable stocks to add to your portfolio, here are five stock picks from MayBank Kim Eng (MBKE) for 2018.
5 Other Stocks To Pick Up Before 2018
While the property sector has been receiving its fair share of attention, GuocoLand seems to be left out of the property fever and hence making it a laggard within the sector. Yet, MBKE believes that there is compelling relative value in GuocoLand due to its upcoming launches. Moreover, its fundamentals are improving as a property play. Currently, trading at 0.7 times forward-FY17 book value, GuocoLand is trailing UOL Group’s and City Developments’ 0.9 times.
MBKE reiterates a “BUY” for GuocoLand with a target price of $2.90 versus its current share price of $2.19 (Potential upside: 32.4 percent).
2. Singapore Post
In its strategic review, Singapore Post’s new CEO disclosed four themes to aim for a turnaround in its declining performance. The four themes include: Establishing market leadership as the eCommerce logistics space in Singapore, delivering full value from overseas investments through integration and turnaround TradeGlobal, igniting future growth engines by strengthening strategic collaboration with Alibaba, and driving cost leadership.
According to MBKE, “three out of four key earnings contributors have shown a clearer sign of a turnaround in the latest results”.
As such, MBKE rated Singapore Post with a “BUY”, assigning a target price of $1.50 which implies a potential gain of 22 percent from its current share price of $1.23.
3. Best World International
MBKE expects Best World International’s (Best World) China operations will continue to lead growth, along with its improved service quality and better brand confidence. Best World’s Taiwan unit should start to recover in 2018, after having resolved the impact from heavy promotion last year.
Adding on, the market may have potentially misunderstood recent revenue weakness to be due to operations. In actual fact, the “weakness” in the top line was a result of the change in mix of operating business model and geography.
Potentially, Best World could see a reversal in sentiments in 2018 and MBKE gave it a “BUY” call with a target price of $1.88. Best World is now trading at $1.31, which means investors are looking at an implied return of 37.4 percent.
ComfortDelgro Corporation (ComfortDelGro) is MBKE’s contrarian play in 2018. While the taxi industry is not looking rosy, MBKE believes that ComfortDelgro still deserves to be in your portfolio because the downside for its taxi segment has been priced in. Furthermore, ComfortDelgro now trades at an attractive ex-taxi free cashflow yield of 7.8 percent for forecasted FY18.
More importantly, with the positive news from its Uber tie-up and turnaround of its rail segment from the full opening of Downtown Line 3, shareholders could be looking to a better year in 2018.
Correspondingly, MBKE gave ComfortDelgro a “BUY” call and rated a target price $2.40. This contrarian play can potentially reap an upside of 24.3 percent from ComfortDelgro’s current share price of $1.93.
5. Health Management International
Healthway Management International (HMI) was put in a spotlight when Temasek-owned Heliconia Capital Management snapped a 2 percent stake in the private healthcare player.
Like many other houses that began covering HMI, MBKE’s recommends HMI for its unique independent operating model for providing healthcare training in Singapore, as well as its leading market share for medical tourists. These differentiate Health Management International from its peers in the healthcare play.
In FY18, HMI is expected to grow bed capacity from 166 beds to 200 beds in its Johor-located Regency Specialist Hospital while the company progresses with plans to build the 380-bed extension block.
As such, MBKE sees HMI’s growth potential as an attractive proposition, rating it a “BUY” call with a target price of $0.80, representing an upside potential of 23.1 percent from the current share price of $0.65.