Investors Takeaway: 4 Big-Name SG Stocks That MUST Be In Your Portfolio
- Keppel Corporation (Keppel Corp)
According to CIMB, Keppel Corp has the potential to declare higher dividends on the back of stronger gains from its asset recycling, along with stronger recovery in offshore and marine (O&M) margins.
With the OPEC striking a new deal on production output, higher oil prices should support the demand for rigs. This will eventually lead to more de-risking of its jack-up inventory, resulting in improvement in operating leverage.
Apart from its offshore and marine business, CIMB notes that Keppel Corp is also a proxy to ride the property cycle in Singapore and emerging markets with its land bank of 61,000 homes.
BUY, TP $10.00
- Sheng Siong Group (Sheng Siong)
Following a slowdown in FY17, Sheng Siong is starting to see swifter supermarket wins. In 1Q18 alone, two new stores were won, which is much faster than CIMB had projected (CIMB projected them to come on board in 2Q18). CIMB highlights that Sheong Siong’s pipeline is still robust given the ample supermarket opportunities for the year. Thus, CIMB adjusted its outlook on Sheng Siong’s store count and raised it to 50.
From a fundamental perspective, Sheng Siong boasts a strong balance sheet with net cash/share of $0.05. It is currently trading at 12-month forward P/E of 19.6 times which is below its 3-year average mean despite a stable return-on-equity of 25.4 percent.
BUY, TP $1.18
- ST Engineering
The trend of strong engine maintenance, repair and overhaul (MRO) revenue is likely to last for 3-4 years as ST Engineering ramps up more capacity to cope with the demand recovery. In the next six months, there could be potential re-rating of ST Engineering should there be an award of defence contract to supply amphibious combat vehicles (in collaboration with SAIC) to the US Marine Corps. The results of the bid will be known by June/July. CIMB also notes that ST Engineering is a proxy to ride the secular trend of smart cities spending globally.
ST Engineering is currently trading at 19.6 times forward-FY19 P/E, which is still below its 5-year mean of 21 times.
BUY, TP $3.80
- UOL Group (UOL)
UOL is the top property pick for CIMB, given its diversified business model spanning across residential, commercial, hospitality and investment holding.
UOL announced 1Q18 net profit that fell slightly below CIMB’s FY18 forecast. However, CIMB notes that UOL’s Amber 45 launch seems to be drawing strong preview interest. With Tre Ver to be rolled out in 3Q18, CIMB expects UOL to continue riding the strong interest in property launches this year.
Besides its property segment, CIMB also expects the office portfolio of UOL to benefit from the office upcycle.
BUY, TP $9.65