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Maybank KE

UOB KAYHIAN

Singapore Aviation Services

ST Eng most preferred; SIA Eng least

ST Eng is our most preferred in the sector. While it currently offers a lower potential return than SATS, it is also relatively insulated from short-term fluctuations in passenger, cargo volumes and flight frequency. SATS is our next preferred – YTD relative stock price performance has no doubt been weighed by collapsing Singapore and Hong Kong cargo data but investors should also bear in mind some mitigating factors of new cargo terminals in Damman, Mumbai, ground handling JV with AirAsia (AAGB MK; CMP MYR1.91; TP MYR 1.56; Sell) and a ramp up of China central kitchens. And while SIA Eng stock has been the best performer, it has been largely fuelled by potential privatization talk on the street; on the operational front there has been little to surprise us on the upside in recent quarters and we believe the growth initiatives could take another 2-4 quarters to start showing through.

Property – Singapore Retail

The Inexorable Rise Of E-Commerce

We believe that as e-commerce takes ever bigger bites out of the retail pie, the secular downtrend for physical retail will continue apace. CAPL has a larger exposure to retail malls both here in Singapore and in China vs CDL. As a result, we prefer CDL (BUY/ Target: S$12.00) over CAPL (HOLD/Target: S$3.80, entry price: S$3.30). Maintain MARKET WEIGHT on the sector.

 

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