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.|
April Market Overview
The Singapore market (STI) surged 5.8% higher in Apr '19 as it rode on bullish sentiment over 1) rebound in US and China economic data, which soothed concerns over global growth, 2) optimism over US-China trade deal, 3) dovish tilt by the Fed and 4) resurgent oil prices, which rallied to a 6-month high.
Meanwhile, banking stocks outperformed after DBS reported stronger-than-expected 1Q19 earnings. Investors also cheered the move to pay quarterly instead of semi-annual dividends from FY19, thus providing yield-hungry shareholders with a more regular income stream.
Ytd, the STI rose 10.8%, giving a total return (including dividends) of 11.5%. Only JardineMatheson, Dairy Farm suffered losses, while 17 chalked up double digit returns, led by Thai Beverage (+39.4%).
Against this backdrop, Market Insight’s Growth, Value, Yield (GVY) basket of stocks also achieved a solid average total return of 12.6%, narrowly beating the benchmark index by 0.7ppt.
Growth List +15.3% YTD
The Growth portfolio was boosted by the sharp rebound in APAC Realty following cooling measures last year as prices were stable despite slower take-up rates for new launches. The group has also lined up 46 projects totalling 20,000 new homes for launch in FY19 and is deepening its presence in overseas markets.
We took profit on Venture Corp for a massive total return of 156% since entry in Apr ’13 after the EMS manufacturer released its 1Q19 results, which flagged near term earnings volatility stemming from some product transitions.
Value List +11.9% YTD
The Value portfolio continued to be buoyed by index stock picks though we took profit on Yangzijiang after a solid rally of 85% from its Jul ‘18 bottom. We believe the market has already priced in most of the positives, as the shipbuilder faced slower order wins going forward.
We also exited Genting Singapore despite the extension of the exclusivity period for its casino licence till end-2030. In particular, we surmise that the 50% hike in casino entry levy and higher gaming tax rates could weigh on short-term earnings before its non-gaming attractions are completed in 2024-25. This will be exacerbated by the anticipated 2ppt GST hike to 9%, likely to take effect between 2021 and 2025.
On the other hand, we entered Japfa in the belief that concerns over Indonesian poultry prices and African swine fever in Vietnam are overblown. The agri-food group is still one of the cheapest upstream food stocks and trades at a significant discount to its peers.
Yield List +17.8% YTD
Performance was driven by semiconductor equipment contract manufacturer, UMS along with the recovery in tech stocks, as well as the capital flight towards yield stocks especially S-REITS.
We added Sasseur REIT given its attractive FY19e DPU yield and strong pipeline of potential outlet malls available for future acquisitions. In addition, Sasseur REIT has recently switched to quarterly payouts instead of semi-annual.
Note: * Including dividends
** Priced in USD
This document is not research material and it has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. This document does not necessarily represent the views of every function within Maybank Kim Eng Securities.
This document is being distributed for general information only and it does not constitute an offer, recommendation or solicitation to enter into any transaction or adopt any hedging, trading or investment strategy, in relation to any securities or other financial instruments. This document is for general evaluation only, it does not take into account the specific investment objectives, financial situation or particular needs of any particular person or class of persons and it has not been prepared for any particular person or class of persons.
Opinions, projections and estimates are solely those of Maybank Kim Eng Securities at the date of this document and subject to change without notice. Past performance is not indicative of future results and no representation or warranty is made regarding future performance. Any forecast contained herein as to likely future movements in rates or prices or likely future events or occurrences constitutes an opinion only and is not indicative of actual future movements in rates or prices or actual future events or occurrences (as the case may be).
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