Compiled by Andrea Soh
RHB Research, Dec 19
While it would be difficult for FSSTI to mirror the strong performance registered in 2017, we believe 2018 cannot be written off completely.
It is for the first time in many years that forward EPS estimate has witnessed upgrades.
While a slowdown in export growth would drag economic growth lower, we are seeing early signs of recovery in domestic demand - gradual recovery in residential property market and steady uptick in retail sales.
We put 2018 Index target at 3,650, implying a 10 per cent total shareholder return.
With changing mix in Singapore's growth constituents, we recommend that investors stay selective.
Consumer: Overweight with preference for companies with regional exposure. Dairy Farm and Food Empire are our preferred picks.
Reits: Overweight with preference for hospitality and industrial. Ascendas Reit (TP: $2.90) and OUE Hospitality (TP: $0.88) are top picks.
Our preference is for Reits that would be direct beneficiaries of improvement in economic activity, and/or have a strong balance sheet and can undertake accretive acquisitions.
Banks: Neutral with Overweight bias. UOB (TP: $28.88) is top pick, due to its large exposure to residential mortgage market and strong balance sheet.
Property: Neutral with Apac Realty (TP: $1.20) as top pick.
We expect property prices to rise by 3-7 per cent in 2018, assess that recent en-bloc frenzy and intense competition in land sales could limit developer margins and see risk of government implementing more supply-side measures.
THAI BEVERAGE PUBLIC CO | BUY
DEC 19 CLOSE: $0.95
TARGET PRICE: $1.07
DBS Group Research, Dec 19
ThaiBev's 49 per cent unit named as winner for 54 per cent stake in Saigon Beer Co (Sabeco), a market leader in Vietnam.
Acquisition done at high multiples, but strategic for growth and regionalisation.
According to Euromonitor data, Sabeco holds about 41 per cent market share of the beer market, ahead of Heineken (second) and Habeco (third), with shares of 23 per cent and 18 per cent (in 2016).
Balance sheet able to fund acquisition; post-acquisition debt/earning estimated at 0.96 times (based on effective stake).
May trigger monetisation of Fraser Centrepoint Ltd to deleverage.
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