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.|
August Market Overview
The Singapore market (STI) fell 5.9% in Aug '19 as investors fled risk assets on the escalation in US-China trade war in tit-for-tat retaliatory tariffs, as well as the inversion of the US yield curve, which is a normally harbinger of an coming recession.
Ytd, the STI gained 1.2%, giving a total return (including dividends) of 4.8%. On an equal weighted basis, the average gain of the 30 constituent stocks was 5.2% with 12 stocks in the red, while 14 chalked double digit returns, down from 18 counters in July.
Stripping out outsized performer, Thai Bev (+50.3%), the average return for STI component stocks was 3.6%.
Against this backdrop, Market Insight’s Growth, Value, Yield (GVY) basket of stocks achieved an average total ytd return of 8.8%, beating the benchmark index by 3.7ppt.
Excluding top loser, Japfa, which was dragged down by the African swine flu outbreak and poor poultry prices, average ytd return for the GVY portfolio would have been a very respectable 10.4%.
Growth List +7.3% YTD
During the month, we made several changes to our Growth portfolio. We exited APAC Realty and HRnetGroup on lower-than-expected 2Q19 results against the backdrop of a slowing economy and macro headwinds.
Meanwhile, we added AEM Holdings and Penguin Int'l on their healthy order prospects, as well as Koufu given its strong cash generative business and outlets expansion plan.
Value List +6.6% YTD
The Value portfolio was lifted by our timely exit of Yangzijiang and SIA Engineering (SIE) after earlier share price appreciation limited capital upside, prompting us to take profit with >20% ytd return.
We added CSE Global to our Value basket on expectations of a stronger 2H19 underpinned by 1) progressive completion of greenfield projects won in 1Q17; 2) kick-starting of Singapore infrastructure projects; as well as 3) robust new orders win of $106.3m (+19.3%), bringing its outstanding order book to $188m. Valuation is undemanding at 10x FY19e P/E, below its 5 year historical mean of 12x and supported by yield of almost 6.5%.
Yield List +12.8% YTD
The continued strong performance by REITs bolstered the Yield portfolio, which came on the back of increasingly flight towards defensive and high yield counters. Moreover, investors also looked to a widely anticipated Fed rate cut in Sep ‘19 amid dim global economic outlook.
Note: * Priced in USD
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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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