Our retail research team has created 3 stock lists, namely Growth, Value and Yield.
|The Growth List comprises of small-mid capitalisation companies with business catalysts which will potentially grow their earnings in the near future. The Growth portfolio would be suitable for investors looking for higher returns and are willing to tolerate the risk of higher short-term volatility of stock prices.|
|The Value List focuses on companies which are undervalued based on their share prices as compared to the company fundamentals. It would be suitable for conservative investors who prefer price stability and have a longer investment horizon.|
|The Yield List comprises of stocks that provide consistent dividend pay-out. It would be suitable for investors whose primary focus is to gain regular dividend income from their investments.|
June Market Overview
The Singapore equity market entered correction territory in Jun and continued to slide as escalating fears of a US-China trade war spooked investors, sparking a regional funds outflow.
Accordingly, total market cap of 738 listed stocks on the SGX shrank 3.4% last month to $947m, with the STI declining 4.7% from May.
Banks (DBS, OCBC, UOB), telcos (StarHub, Singtel), property firms (CapitaLand, UOL), transport operators (CDG, SIA) and industrials (Venture, JC&C), including conglomerates (Keppel Corp, SCI, STE) took a beating, all dropping by more than 5%.
Ytd, the STI fell 3.9% (May: +0.7%) and suffered a negative return of -2.3% (Apr: +2.5%), inclusive of dividends. On an unweighted basis, the average loss of STI constituents was 7.0% (May: -2.6%, with 20 out of 30 stocks in the red.
As expected, our Growth, Value, Yield (GVY) basket of stocks was knocked back by the broad market retreat, giving up almost all of its 1Q18 gains, but still emerged with a marginal average ytd return of 0.5% (May: +5.7%), helped by earlier profit-taking in some tech counters.
Growth List +7.8% YTD
Average total return of the Growth portfolio was eroded by sharp reaction in share prices of technology stocks Venture Corp, Valuetronics and AEM Holdings as they fell victim to news of softer sales of key clients and the potential damage and disruption of tariffs on global supply chains.
However, the share price correction appears to be overdone with valuations down to undemanding levels.
Rubber chemicals producer, China Sunsine remains the top performer, while new entrant HRnetGroup chalked up decent gains as it rides on improving jobs data in Singapore and strong business momentum in North Asia.
APAC Realty declined in tandem with property stocks and fewer property transactions in 5M18 but volumes should pick up I 2H18, supported by rising housing prices, new project launches and wave of en bloc and government land sales.
Value List -10.5% YTD
Performance of our property-heavy Value portfolio continued to be weak, as they still seemed to lag behind the upturn in the Singapore residential market.
We added Yangzijiang to the list as valuations have fallen to attractive levels, with downside risk supported by a US$4.1b order book, net cash pile of $0.73/share, share buybacks and dividend yield of 5%.
Yield List -3.6% YTD
The Yield portfolio was weighed by rising interest rates following the second Fed rate hike this year, as well as the de-rating of UMS along with its industry peers, and competitive pressures facing APTT.
But the Taiwan pay TV operator reaffirmed its FY18 DPU guidance of 6.5¢, and now offers an enticing yield of over 15%.
Note: * Including dividends
** Priced in USD
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