Tactically interesting – Time to fish
Following a 7% correction from its peak on 15 April, the FSSTI's technical indicators are
in oversold territory, and we believe it is now an opportune time for investors to add
. Amongst underperformers in the recent sell-down, we remain positive on
CapitaLand and UOL and maintain these stocks as our top picks. We removed FCT from
our top picks list as we believe upside to price target is no longer compelling.
YTD earnings estimate trends – Beats: few and far between
Almost all sectors have suffered consensus earnings estimate downgrades, especially in
the capital goods and consumption-linked name.
The transport sector had the best
earnings outcome YTD, on the back of:
(a) lower operating costs such as fuel (SIA, NOL,
SMRT, CDG) and fees (SATS)
(b) improvement in regulatory environment (SMRT, CDG).
H215 outlook: Stick with developers, transport
In the coming six months, we maintain an optimistic view of the property developer
and transport sectors, where we anticipate regulatory tailwinds. On the contrary, we
think regulatory headwinds will intensify significantly in the telcos sector, over concerns
of a 4th mobile operator. We are neutral on banks on loan growth concerns, while
capital goods (offshore) could be value traps as positive catalysts are lacking. As the US
inches closer to its first hike in the Fed Funds rate, we are cautious on the REITs.
Our preferred picks are: CapitaLand, ComfortDelGro, CapitaRetail China Trust, Global
Logistic Properties, Jardine Matheson, SATS, SMRT, UOB, UOL Group, Wilmar and
. (Read Report)
Source : UBS Global Research
Labels: Equity Strategy