Home » » Singapore Market Strategy - Every dog has its day

Singapore Market Strategy - Every dog has its day

Shared By Stock Fanatic on Wednesday, March 14, 2018 | 14.3.18

● With Singapore cyclicals vs defensives P/B valuation gap of 0.22x close to historical lows, and global growth momentum peaking, we believe defensive laggards are starting to offer attractive risk-reward.

We use Credit Suisse HOLT® to run two screens to identify underperforming stocks where

(i) market-implied Cash-flow return on investment (CFROI) is low relative to history, and

ii) forecast CFROI is expected to improve from historical levels.

Our analysts believe ST Engineering, ComfortDelgro, SGX, ThaiBev and SingPost appear to have clear turnaround drivers and catalysts.

● Street sentiment is generally cautious on these names, while they would bear the bulk of institutional net selling from 2016. On a market-cap weighted basis, these five stocks offer a dividend yield of 4.0%, above MSCI Singapore dividend yield of 3.2%.

● We adjust our model portfolio by adding weight to these five stocks. This is funded by a lower weight in consumer discretionary, property and tech sectors. With our positive view on economic and earnings growth, our two largest overweights remain in banks, and offshore and marine.

With the outperformance of cyclicals since 2017, the valuation gap between cyclicals and defensives has narrowed to 0.22x, vs the tenyear average of 0.72x. There were only two previous periods where the valuation gap has been narrower, which would be in Sep-2006 and April-2011.

In these episodes, defensives have outperformed cyclicals by 15% on average six months after.

Using Credit Suisse HOLT, we run two screens to identify underperforming stocks where

(1) market-implied CFROI is low relative to history, and

(2) forecast CFROI is expected to improve from historical levels.

OUTPERFORM rated stocks that screen well include Singtel, ThaiBev, CD, SingPost, STE, SGX, CMT and MCT. From a bottom up perspective, our analysts believe STE, CD, SGX, ThaiBev and SingPost appear to have clear turnaround drivers and catalysts. (Read Report)

Source : Credit Suisse Asia Pacific Equity Research


Posted on Wednesday, March 14, 2018 | 14.3.18
With No comments


Join Me On: Facebook | Twitter | Google Plus ::: Thank you for visiting ! :::
DISCLAIMER:
Some of the photos shown in this blog are randomly sourced from the Public Domain. If there is an infringement in the copyright of the photos; kindly inform us and it will be removed immediately. Thank you for your kind understanding.
Share this article :

Post a Comment

 
Modified by : Stockfanatic
Copyright © 2008 - 2018. Singapore Stock Market News - All Rights Reserved
Template Created by Creating Website Published by Mas Template
Proudly powered by Blogger
Related Posts with Thumbnails