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Sunday, October 13, 2013

UOB KH's Stock Picks, OCBC 'Holds' SMRT, Maybank 'Sells' Sheng Siong

Source: http://www.nextinsight.net/index.php/story-archive-mainmenu-60/919-2013/7482-uob-khs-stock-picks-ocbc-holds-smrt-maybank-sells-sheng-siong

UOB Kay Hian highlights 'buy' stocks in mid-cap debris
 
Halcyon (BUY/Target: S$1.00)
Triyards (BUY/Target: S$1.11)
Courts Asia (BUY/Target: S$1.14)
Ying Li (BUY/Target: S$0.64)
Yong Nam (BUY/Target: S$0.41)

Mid-cap stocks in Singapore have been hit by indiscriminate selling after the recent plunge in share prices of Blumont, Asiasons and Liongold. The selldown of just these three stocks has resulted in a combined market capitalisation loss of some S$10b from their 52-week highs.

Meaningful correction + unchanged fundamentals = BUY. Within our mid-cap universe, we highlight some of our top picks that have consolidated 25% or more from their 52-week highs.

In our view, there has been no change in the fundamentals of these companies, including Halcyon, Courts Asia, Triyards, Yong Nam and Ying Li.

Although sentiment could be lacklustre for mid-cap stocks, we think the indiscriminate selldown is a buying opportunity for investors with a medium-term investment horizon.
 



OCBC keeps SMRT target price unchanged at $1.30

Analysts: Lim Siyi & Andy Wong

The free MRT ride scheme introduced on 24 Jun has seen rail ridership figures for Jul and Aug exceed 60m rides for the first time in SMRT’s history.

The incentive to promote travel to 16 designated MRT stations in the city area before 8am has also aided in the alleviation of a congested rail system during the morning peak periods. In terms of financials, SMRT will bear the cost of free travel up to S$5m and the relevant authorities will compensate the company for the remainder.

Upgrade to HOLD on valuation grounds.

SMRT is unlikely to see an uptick in its share price due to the lack of a fare increase (delay by the Fare Review Mechanism Committee) and pressures on operating expenses.

However, since the end of Aug, SMRT’s share price has stabilised between a tight band of 1.29-1.30, which has helped to arrest its slide of 10% following its 1Q14 results.

The lower frequency of bad publicity has definitely aided the company, and we believe that the street has already factored in the majority of the negative expectations for FY14 as well as concerns over capex requirements.

As SMRT is currently trading close to our unchanged fair value estimate of S$1.30, we upgrade the counter to HOLD on valuation grounds ahead of its 2Q14 results release at the end of the month.




Maybank KE rates Sheng Siong Group a 'sell"

Analyst: James Koh

No growth on the horizon, cut to SELL

Sheng Siong is a single-market, single-category supermarket operator in Singapore.

As the third-largest player in a mature market, there is limited potential for growth on the horizon, barring a significant change in its business strategy.

While we admire Sheng Siong as a well-run company with great efficiency, this hardly justifies the stock’s current lofty valuations of 22x PER.

Implied dividend yield of just 4% can be achieved elsewhere.

Downgrade from HOLD to SELL.

Share price: SGD0.645. Target price: SGD0.58 (previously 0.74)

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