With STI now leading the race as Asia’s top performing market index, the market is starting to be concerned about overvaluation. However, there are still some blue chips that have yet to hit its peak. Here are four blue chips that Daiwa Capital Markets thinks will continue to prosper and help investors make alpha return in the second half of 2018.

Investors Takeaway: 4 Blue Chips That Will Prosper In 2H18

  1. DBS Group Holdings

Combination Of Growth And Yield Play

Among regional banks, the “earnings-per-share” growth outlook looks the most compelling for Singapore banks. According to Daiwa, Singapore banks have the highest EPS growth outlook in the region. Within the Singapore banks, DBS Group Holdings (DBS) is the runaway leader for its EPS growth. Apart from growth, DBS is also emerging as a compelling high-yield stock. DBS provided a much more investor-friendly final dividend, which is regarded as a bullish signal to the market. It is a reflection of the management’s confidence in both its business outlook and capital position.

Daiwa Rating: Outperform

  1. City Developments

Capturing Home Sales Momentum With Pipeline Of Projects

If you are looking for exposure to the property sector, Daiwa thinks that City Developments is your go-to stock. With a pipeline of more than three years of sales following the latest tender results, City Developments is well positioned to capture the home sales momentum in Singapore. City Developments has won 3 of the 4 government land sale tenders, which will yield 1,750 units. This is 1.5 times its annual home sales units in 2016 and 2017 respectively.

So far, City Developments has been getting good response for its launches. Given that all of the property-cooling measures remain in place, the sales so far have been encouraging. Moving forward, City Developments has one of the busiest launch schedules for 2018, which is expected to continue to be well received. Upcoming launches could act as share price catalysts for City Developments.

Daiwa Rating: Outperform

  1. Keppel Corporation

Clean Start To 2018 After Provisions

Keppel Corporation’s (KepCorp) share price has retreated from its peak in late January 2018 due to a combination of market weakness and disappointment that no significant corporate initiatives were taken to consolidate the rigbuilding industry in Singapore. Its 4Q17 results also missed consensus expectations due to one-off provisions/impairments. However, moving forward, Daiwa opines that KepCorp’s O&M division is now on a stronger footing post the kitchen-sinking provisions.

Daiwa expects all four of its key divisions to register positive earnings growth for 2018. The current share price weakness in light of the lack of any major company-specific news is an ideal opportunity for investors. The current state of KepCorp’s share price means that investors can partake in the growth of the Singapore and China property markets with zero value ascribed to its O&M division.

Daiwa Rating: Buy

  1. Wilmar International

Integrated And Diversified Business

For investors looking to gain exposure to the palm oil space, Wilmar International (Wilmar) should be the preferred pick, according to Daiwa. Despite a stronger-than-expected performance in the company’s oilseeds and grains segment, Wilmar’s share price has only risen by 4.2 percent year-to-date. This was largely due to investors’ concern over weakness in its palm and sugar businesses. However, Wilmar’s integrated business model and diversified exposure to non-palm businesses will allow Wilmar to benefit from lower feedstock prices. A potential listing of its China assets in 2019 could also catalyse the share price of Wilmar.

Daiwa Rating: Buy

Get weekly updates from us

Build your wealth. Start now.

Enjoying our content? You might want to subscribe to our weekly newsletter.
Hand-picked content and wealth-building resources for you.

You May Also Like

Editor's Picks