• Reflation and cyclical recovery picks outperformed in January. Our reflationary and cyclical recovery picks such as Keppel Corp, SIA, CDLH-T, Wing Tai and City Developments delivered solid returns in January (+6-18%) compared to the 3.9% mom rise in the FSSTI. However, Thai Beverage (0% mom) and Singtel (-0.8% mom) underperformed. For Thai Bev, the market did not view its investment in Sabeco positively while SingTel was relatively flat as the market opted for higher beta and recovery plays to ride the bullish sentiment.
• Add DBS and remove Thai Beverage; current picks could also see a rise in target prices. DBS is our latest addition to our Alpha Picks. While OCBC remains our top banking sector pick, we think DBS could offer more tactical upside being the beneficiary of rising interest rates as well as a potential positive surprise from a review of its dividend policy. We remove Thai Beverage from our list as its near-term performance could be hampered by sentiment overhang from the Sabeco acquisition. Otherwise, we are sticking to our reflation and cyclical recovery plays as we expect our target prices for these stocks could stretch upwards as corporate earnings pick up momentum or asset prices continue to rise. Our key picks are City Dev, Wing Tai, Keppel Corp, SIA, GL and CDLH-T. (Read Report)
Source : UOB KayHian Research