| • One after another, various research houses are putting out their 2024 crystal-ball gazing. • CGS-CIMB's report today, Navigating Singapore, is 90 pages long, a contrast to Maybank's (see: Have "faith and conviction" in ..... ComfortDelGro, Frencken, CICT) • Read excerpts from the CIMB report below. |
Excerpts from CGS-CIMB report
• Upgrade tech sector to Overweight, with a favourable bias towards semicon plays. We see tailwinds from a shift from a previously more services sector-dependent growth into a more balanced recovery between the manufacturing and services sectors.
The manufacturing sector is guided by the gradual recovery of the global electronics industry and favourable base effects, while growth in the services sector remains resilient and should normalise.
Semicon sector recovery and manufacturing diversion from China to Malaysia are potential tailwinds for the tech sector. 
Semiconductor and tech stocks -- bet on them. Our picks are VMS (Venture), FRKN (Frencken) and UMSH (UMS).
We downgrade capital goods to Neutral after the strong share price performance in 9M23 and will look to timing for re-entry.
• In a rate pivot environment, we advocate rotating into REITs, which is anticipated to resume DPU growth in 2024F.
Our sector picks remain industrial, retail, hospitality, and office, in that order of preference. Industrial REITs could benefit from stronger economic activity.
Despite the yoy decline in Oct RevPAR and slower-than-expected pick-up in Chinese inbound tourists to-date, we remain upbeat on hospitality in 1H24F given the slew of upcoming events.
Visibility is more opaque in 2H24F for now, potential upside risk to 2H will likely have to come from a stronger Chinese economy which may spur more overseas travel, resulting in a possible spillover impact from a return of mass market tour groups into the ASEAN region, given the new visa-free entry requirements into Malaysia, Thailand and Singapore (details to be announced and planned to be implemented in early-2024).
• With the Singapore market pegged to deliver a total return of c.10% (including dividend yield of 6%), we think high yield plays will continue to garner mind-share of investors.
Our dividend yield screen shows the three Singapore banks – UOB, OCBC, DBS – could potentially pay 6.7- 8% yields in FY24F.
Other big cap names fit our criteria of >6.5% yield or having upside catalyst includes CD (ComfortDelGro) and Netlink Trust.
• Our end-2024 FSSTI target is 3,392, pegged at a 11x FY24F P/E and translating to a target dividend yield of 5.4%.
Our top conviction picks include CD, CLAR, CLAS, GENS, SATS, STM, UOB, VMS and YZJSGD.
Within our small cap universe, we like CENT, CSE, FRKN, RSTON AND UMSH.
• Downside risk to our view include sticky inflation that would keep rates high for longer or a steeper than expected global macro slowdown that could adversely impact corporate earnings.
• We raise our tech sector rating to Overweight on semicon industry recovery and the exposure of tech companies benefiting from the diversion of manufacturing from China into Malaysia.  CIMB has an overweight rating on the glove sector, where Riverstone Holdings stands out.• We downgrade capital goods to Neutral after a stellar outperformance and would look to timing for re-entry.• We raise the gloves sector to Overweight on an upgrade of RSTON (Riverstone Holdings) with its strategy to focus on customised gloves paying off as well as nimble execution abilities. REITs, consumer, construction, gaming, healthcare, and telcos are maintained as Overweight, while we have Neutral calls on commodities, financials, property, transport and gloves. • In terms of conviction picks, we add VMS and SATS to our top pick big cap list and remove STE. In the small cap space, we include FRKN and RSTON and remove CAO. |
Full report here.
