This is a report issued by DBS Vickers on 26th August when the market sell down due to anticipation of QE tapering (now that we know that there is no QE tapering, we probably can expect a rebound in the STI)
In this report, they had recommended the following stocks:
1. Technology stocks are early recovery plays – CSE and Venture have significant exposure to US/Europe and offer attractive yields of 4.7% and 6.7% respectively. CSE’s proposed listing of its UK subsidiary could lead to a dividend bonanza on successful listing.
2. Selected industrials – Ezion and Goodpack will leverage on their niche positions in the global arena.
3. Stocks with earnings visibility supported by yield such as SingPost, Comfort Delgro,.ST Engineering and Hutchison Port
Click here to access the report
Other articles on SG stocks investing strategy
Hunting for Value In Singapore Stocks
SG Stock Investing Strategy: UOB Kay Hian
Invest Like Benjamin Graham in Singapore Stocks
Showing posts with label ST Eng. Show all posts
Showing posts with label ST Eng. Show all posts
Saturday, September 21, 2013
Saturday, July 6, 2013
Hunting for value in Singapore Stocks
This is a post from The Edge June 14 edition. With worry on QE3 tapering, stock markets around the world has been volatile and been falling. Singapore stock market has also felt the impact with STI falling back to where it started in beginning of 2013. In this report, Citi Research points out a handful of stocks in various sectors to look for value in.
Whatever the case, STI’s valuation based on its price-earnings ratio (PER) is back at 15 times. Citi expects support at a PER 14.2 times, which is the equivalent of 3,000 on the index. The Euro crisis low was at a PER 13 times, or 2,700.
But the problem is that earnings growth in Singapore is likely to be modest. “Within our coverage universe, flat aggregate EPS trends are expected for 2013, growing into a modest 8% in aggregate EPS growth for 2014E,” Citi states. “Our Earnings Revisions Count ratio (ERC or the upgrade versus downgrade count) is in mildly negative zone at –10% versus –16% at end-Feb post 2012 results.”
Citi has a handful of stock picks for when the market settles and investors return to hunting mode. They are Keppel Corp for capital goods, Hongkong Land on valuation basis, ST Engineering and Venture Corp to play the stronger US$, and United Overseas Bank as the most defensive of the local banks.
Keppel Corp is still the world’s largest rig builder despite the rise of Chinese yards. “Our view remains that the rig cycle remains intact despite volatility in oil prices and we believe orderbook momentum can continue in 2H13, with margin resilience,” Citi reckons. The broker has a $13.45 target price based on a marginal discount to its RNAV estimate of $13.58, applying a 20% discount to the value of Keppel's investments in M1, K1 Ventures, Dyna-Mac and K-Green Trust, its 55% stake in Keppel Land at market price. An average PER of 17 times FY13-15 earnings is applied for the offshore and marine business.
UOB has retraced by around 10%. Citi likes UOB for its Asean footprint and growing fee income. Its target for UOB is $20.30 using a dividend discount model assuming EPS of $1.67, dividend per share of 63 cents and 7.1% long-term growth rate.
Hongkong Land is trading at a discount to RNAV of 40% compared to an average of 20% elsewhere.“While there is risk of rising interest rates impacting cap rate valuations, we are already using a cap rate of 5.0% versus the firm’s 4.25%,” Citi says.
Venture Corp too benefits from a stronger US$, and Citi believes it can sustain its dividend yield of 7%. Moreover, its 12-month target of $8.12 is based on modest valuations, of 13.7 times PER for this year’s earnings.
To read other undervalued SG stocks and investing strategy highlighted in previous blog entries, click the following:
SG stock investing strategy
Undervalued stock: Goodpack
IN A REPORT dated June 13, Citi Research points out that the STI
is back to where it started in the beginning of the year after having lost some
10% in a month. Meanwhile, Singapore's 10-year government bond yields have
risen to five-year average of 2.1%. While talk of the US Federal Reserve tapering
its QE programme and a stronger US dollar are the main reasons for the rise in
yields here, Citi’s economists have also raised GDP growth for Singapore to
2.3% from 2% previously.
Still, the market’s decline
should not be blamed entirely on QE tapering. “Recent concerns about the
current-account deficit in Indonesia have increased worries. Singapore’s
economy is linked to Indonesia’s via exports, banking (trade finance, wealth
management), property ownership, tourism as well as the medical tourism segment,”
says Citi Research.Whatever the case, STI’s valuation based on its price-earnings ratio (PER) is back at 15 times. Citi expects support at a PER 14.2 times, which is the equivalent of 3,000 on the index. The Euro crisis low was at a PER 13 times, or 2,700.
But the problem is that earnings growth in Singapore is likely to be modest. “Within our coverage universe, flat aggregate EPS trends are expected for 2013, growing into a modest 8% in aggregate EPS growth for 2014E,” Citi states. “Our Earnings Revisions Count ratio (ERC or the upgrade versus downgrade count) is in mildly negative zone at –10% versus –16% at end-Feb post 2012 results.”
Citi has a handful of stock picks for when the market settles and investors return to hunting mode. They are Keppel Corp for capital goods, Hongkong Land on valuation basis, ST Engineering and Venture Corp to play the stronger US$, and United Overseas Bank as the most defensive of the local banks.
Keppel Corp is still the world’s largest rig builder despite the rise of Chinese yards. “Our view remains that the rig cycle remains intact despite volatility in oil prices and we believe orderbook momentum can continue in 2H13, with margin resilience,” Citi reckons. The broker has a $13.45 target price based on a marginal discount to its RNAV estimate of $13.58, applying a 20% discount to the value of Keppel's investments in M1, K1 Ventures, Dyna-Mac and K-Green Trust, its 55% stake in Keppel Land at market price. An average PER of 17 times FY13-15 earnings is applied for the offshore and marine business.
UOB has retraced by around 10%. Citi likes UOB for its Asean footprint and growing fee income. Its target for UOB is $20.30 using a dividend discount model assuming EPS of $1.67, dividend per share of 63 cents and 7.1% long-term growth rate.
Hongkong Land is trading at a discount to RNAV of 40% compared to an average of 20% elsewhere.“While there is risk of rising interest rates impacting cap rate valuations, we are already using a cap rate of 5.0% versus the firm’s 4.25%,” Citi says.
Venture Corp too benefits from a stronger US$, and Citi believes it can sustain its dividend yield of 7%. Moreover, its 12-month target of $8.12 is based on modest valuations, of 13.7 times PER for this year’s earnings.
To read other undervalued SG stocks and investing strategy highlighted in previous blog entries, click the following:
SG stock investing strategy
Undervalued stock: Goodpack
Tuesday, April 23, 2013
Invest like Benjamin Graham in Singapore stocks
Benjamin Graham is the father of investing and his way of value investing was to search for net-net stocks where he will construct a basket of stocks as his portfolio. His method of value investing is still being widely practiced by value investors such as Seth Klarman, Third Avenue Management etc. In this blog post, I would like to refer to an article by CLSA to explore the idea of investing in Graham-like stocks in the Singapore stock market.
This is a reprint of an article from brokerage research house, CLSA. In this article, they construct a stock screen that incorporates the attributes that Ben Graham looks for in a undervalued stock and run the stock screen through all the SGX stocks to find stocks that fulfill it. The end result of this stock screen is the Ben Graham Number.
What is the Ben Graham Number?
Graham Number is a concept based on Ben Graham's conservative valuation of companies. Graham Number is calculated as follows:
Graham Number = SquareRoot of (22.5 * Tangible Book Value per Share * Earnings per Share)
= SquareRoot of (22.5 * Net Income * Total Equity) / Total Shares Outstanding
Which Singapore stocks passes the Ben Graham Screener?
The following list of stocks passes:
F&N
City Dev
Keppel Land
Ezion
Parkinson Retail Asia
Keppel
Genting
Capitaland
Singapore Airlines
ST Eng
Semb Marine
Golden Agri
YangZiJiang
SATS
Singapore Post
CLSA article below:
This is a reprint of an article from brokerage research house, CLSA. In this article, they construct a stock screen that incorporates the attributes that Ben Graham looks for in a undervalued stock and run the stock screen through all the SGX stocks to find stocks that fulfill it. The end result of this stock screen is the Ben Graham Number.
What is the Ben Graham Number?
Graham Number is a concept based on Ben Graham's conservative valuation of companies. Graham Number is calculated as follows:
Graham Number = SquareRoot of (22.5 * Tangible Book Value per Share * Earnings per Share)
= SquareRoot of (22.5 * Net Income * Total Equity) / Total Shares Outstanding
Which Singapore stocks passes the Ben Graham Screener?
The following list of stocks passes:
F&N
City Dev
Keppel Land
Ezion
Parkinson Retail Asia
Keppel
Genting
Capitaland
Singapore Airlines
ST Eng
Semb Marine
Golden Agri
YangZiJiang
SATS
Singapore Post
CLSA article below:
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