• UOB Kay Hian's alpha picks portfolio focuses on small- and mid-cap stocks. It has consistently outperformed the STI. • In its monthly update for June, UOB KH surprised by adding Food Empire and China Sunsine back into the portfolio after removing them recently. • Its rationale seems to be "in preparation for MAS’ S$5b capital injection, we add in quality mid-cap picks," it said. This is the upcoming Monetary Authority of Singapore programme under which fund managers will be selected to invest S$5 billion into SGX-listed stocks.  • Read on to see why Food Empire and China Sunsine are considered "quality" picks .... |
Excerpts from UOB KH report
| Driven by renewed positive investor sentiment, our Alpha Picks portfolio surpassed the STI in May 25, surging by 7.0% mom on an equal-weighted basis and beating the STI by 5.4ppt. On a market cap-weighted basis, our portfolio outperformed as well, up 1.9% mom and beating the STI by 0.3ppt. For Jun 25, we add CD, CSSC, FRKN, FEH and IFAST while removing SCI, MPM, OTEK and SIE. |
| China Sunsine- Buy |
Analysts: Heidi Mo & John Cheong
• Strong balance sheet and attractive 5.2% yield.
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CHINA SUNSINE |
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Share price: |
Target: |
Sunsine declared a 5.2% dividend yield, underpinned by a strong net cash position of Rmb2,074m (+23% yoy) as at end-24.
This equates to Rmb2.18/share (S$0.40/share), or approximately 70% of its market cap, providing ample room for future dividends and potential share buybacks. 
Heidi Mo, analyst• Maintain BUY with a target price of S$0.63, pegged to a PE multiple of 7.5x 2025F earnings, or 1SD above the mean PE.
The stock trades at an attractive valuation of 1.3x ex-cash 2025F PE.
SHARE PRICE CATALYSTS
• Events:
a) Production commencement for new capacities,
b) higher ASPs for rubber chemicals, and
c) higher-than-expected utilisation rates.
• Timeline: 3-6 months.
| Food Empire - Buy |
Analysts: John Cheong & Heidi Mo
John Cheong, analyst • Fourth straight year of revenue growth. Group revenue rose 16% yoy, marking the fourth straight year of growth despite inflationary pressures and high raw material costs. FEH’s market leadership, agile pricing strategy and strong execution helped cushion margins and maintain volume growth across core markets.
• Expansion momentum accelerating. FEH is ramping up capacity with new manufacturing projects.
These include a snack facility expansion in Malaysia (50% output increase by 3Q25), and a new Kazakhstan coffee-mix plant (15% capacity boost by end-25) and a freeze-dried coffee plant in Vietnam (completion by 2028).
Food Empire (from left) CFO William Fong, Executive Chairman Tan Wang Cheow, and CEO Sudeep Nair.
• Maintain BUY with a target price of S$1.98, pegged to 15x 2025F PE, in line with regional peers.
With a consistent track record of delivering results and easing coffee prices in the past two months, we believe FEH is well-positioned for a valuation re-rating.
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SHARE PRICE CATALYSTS
a) Dividend surprise from robust financials, |
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Full report here.
