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UOB KAYHIAN |
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Technology Disrupted By COVID-19 Pandemic; OVERWEIGHT
MAINTAIN sector OVERWEIGHT, correction represents opportunity. With countries going into lockdown and global supply chains disrupted, Singapore-listed manufacturing stocks have undergone a severe correction. However, some companies under our coverage have solid net cash balance sheets and attractive yields, while others (in the semiconductor sector) should see positive growth despite the ongoing COVID-19 pandemic. Valuations are attractive, and our Top Picks are AviTech, Fu Yu, and Frencken.
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United Hampshire US REIT (UHU SP) Defensive Yield From Necessity Consumption Of Groceries And Self-storage
UHREIT’s grocery-anchored & necessity-based (GANB) retail and self-storage properties cater to essential basic necessities which are less sensitive to economic cycles and unaffected by the COVID-19-related shutdown. Grocery-anchored retail is also e-commerce-resistant due to prohibitive last-mile logistic costs. UHREIT’s defensive strength is further reinforced with blue-chip tenants and long WALE of 8.4 years. Demand for self-storage space is growing due to increasing acceptance of smaller multi-family dwellings
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DBS VICKERS |
RHB |
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Riding the oversold recovery
The Straits Times Index (STI) has risen 14.9% since our previous update in March. Oversold stocks recovered on concerted global fiscal and monetary stimuli as well as signs that the pandemic curve could be ‘flattening’ for the developed markets of US and Europe. The STI is down 20.3% YTD.
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Venture Corp (VMS SP) Impacted By Global Lockdown; Still BUY
Maintain BUY, new SGD16.60 TP from SGD19.30, 6% upside with 4.5% FY20F yield. With regards to the COVID-19 pandemic and countries going into lockdown, Venture has been significantly impacted. Its production is mainly in Malaysia, where a government-mandated Movement Control Order has been in effect. Although its Singapore and China units have resumed operations, the temporary halt in production at some of its factories compels us to cut FY20F PATMI by 13%, which leads to a lower TP.
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Check out our compilation of Target Prices
