Compiled by Claire Huang, The Business Times
UOB Kay Hian, Nov 9
Our 2018 FSSTI target of 3,530 has the potential to stretch to 3,730 should corporate earnings pleasantly surprise.
Meanwhile, we see selective themes for 2018, including multi-year growth stocks, reflation picks, quality laggards and stocks with earnings surprises/specific catalysts.
Investment themes that we favour for 2018 include: a) companies with multi-year growth drivers, b) reflation picks, c) quality laggards, and d) stocks with earnings upside.
Stock picks in 1H-18 portfolio. In the large-cap space, we like OCBC, Keppel Corp, Sembcorp Industries, CapitaLand, Frasers Hospitality Trust, CapitaLand Commercial Trust, Ascendas Reit, SATS, Singtel, Venture and Wing Tai. Mid-cap gems include Cityneon, GL and Banyan Tree. Sell Singapore Press Holdings and top-slice CapitaLand Mall Trust.
SINGTEL | BUY
TARGET PRICE: $4.19 (UNDER REVIEW)
NOV 9 CLOSE: $3.76
OCBC Investment Research, Nov 9
Singtel's Q2 FY18 operating revenue grew 6.9 per cent year-on-year to $4.37 billion driven by growth across all business segments but mainly boosted by the recently acquired Turn, Inc - Consumer (+2.3 per cent), Enterprise (+5.5 per cent) and Digital Life (+105.5 per cent).
This resulted in a 4.8 per cent year-on-year growth in Q2 FY18 earnings before interest, tax, depreciation and amortisation (Ebitda) to $1.29 billion.
The disruptive competition in India continues to impact Singtel's associate, Airtel, which put a drag on the group's results. Singtel also recorded an exceptional gain of S$2 billion in Q2 FY18 on the divestment of NetLink Trust.
Consequently, stripping out the one-off gain, Q2 FY18 underlying net operating profit after tax (NPAT) declined 4.1 per cent year-on-year to $929 million but excluding Airtel's results, it would have grown 2.5 per cent year-on-year, driven by growth in core operations and digital businesses.
Excluding divestment gain, 1H-FY18 underlying NPAT declined 3.8 per cent year-on-year to $1.84 billion but was up 2.7 per cent if Airtel was excluded.
Singtel will be paying an interim dividend of $0.068/share (1H-FY17: $0.068) as well as a special dividend of $0.030/share (1H-FY17: Nil).
ST ENGINEERING | BUY
TARGET PRICE: $4.04
NOV 9 CLOSE: $3.37
RHB, Nov 9
Singapore Technologies Engineering's (STE) reported Q3 FY17 PBT of $163 million (+53 per cent year-on-year) versus our estimate of $167 million.
Growth was aided by the aerospace and electronics, while marine business remained weak. Year-to-date order win of $3.8 billion accounts for 70 per cent of our 2017 order win estimate.
Rising demand for P2F (passenger-to-freighter) conversions and spending on Smart Nation initiatives should support the aerospace and electronics growth in near term.
STE's investment in robotics would lay the foundation for sustained growth for Land Systems in long term. Maintain "buy" with a revised $4.04 target price (from $4.07, 18 per cent upside).
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