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Tuesday, August 20, 2013

DBS Vickers says: Position into stocks that offer recovery & yield – Venture Corp & Jaya


STI’s pullback to 3180 last Friday is in line with our view that the index will likely turn choppy heading towards September with near-term support at 3170.

The lack of earnings upward revision in the just concluded 2Q result season and the shadow of QE tapering come September is likely to contain STI at/below 13.9x (average) 12-mth forward PE in the weeks/month ahead.

Past this choppy period in the near-term, we see STI rising to the 13.9x (average) FY14F PE at 3390 by year-end. We also maintain our view that the correction triggered by QE tapering talk back in May has ended at 3066.
Unless fresh macro uncertainties strike, we do not expect a re-test of this level.

Among the SMCs, we look for recovery names that offer yield as well such as Venture Corp & Jaya.

Venture Corp shares offer a 7% yield and 2H is expected to show improvement with new customer contributions.

Our analyst is optimistic of Jaya’s transformation into a ship charterer from a builder.

Revenue visibility is improving as the group has secured several chartering contracts in recent months. Stock offers 5.7% forward yield.


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