February 1

7 Interesting Stock Ideas [February 2021]

2021 started with a bang with vaccines rolled out across the world. Vaccinations provide hope around the world as countries are able to restart its economies. In the eyes of investors, the restart of economies translate to countries’ growth. This has spurred major indexes in USA notching all-time highs.

As Singapore is a trade reliant country, stock prices of listed companies in Singapore have also increased remarkably since its 2020 March low. As we are moving into 2021, companies have also gotten ready to leverage on the growth that is brought about by the vaccines.

We have identified 7 stock ideas that investors should pay attention to in February.

#1 Food Empire Holding

UOB Kay Hian has maintained its BUY rating  on the stock with a target price of $0.95.

This is at the back of being the ” Aggressive stock buy-back underlines confidence in business outlook. Since the startof the buy-back mandate on 23 Apr 20, Food Empire Holdings (FEH) has bought 3.08m
shares, or 0.6% of its share base. This was mainly carried out in 4Q20 to Jan 21 where FEH
bought back around 2.8m shares for around S$1.9m, potentially signaling a strong set of
results for 4Q20 and confidence in its business outlook in 2021. ”

The analyst also “expect stable demand with positive retail sales in most core markets. Retail sales in
Ukraine and Kazakhstan have returned to positive yoy growth in 2H20.”

“Furthermore, the group is now better prepared in handling a lockdown in terms of logistic and distribution issues experienced in 2Q20”

Above are all potential positive points for the company.

>> Read more about the company here.

#2 Fortress Minerals Limited

Phillip Capital has maintained BUY rating of the company with a higher target price of $0.47.

The positive sentiment is due to “Continued volume growth. Iron ore concentrate volumes sold increased 93.7% YoY in 3Q21.

Spike in margins is also a positive boost of the fundamentals. Gross margins increased from 57.7% to 75.1% in 3Q21. Revenue for the quarter more than doubled, driven by higher prices for high-grade iron ore concentrates.

Operating cash flow increased 7x, which is an impressive sign of its cash generation. 3Q21 operating cash flow of US$11.7mn was 7x the US$1.6mn achieved a year ago. ”

>> Read more about the company here.

#3 Jiutian Chemical Group Limited

CGS CIMB has initiated a BUY rating on the company with a target price of $0.145.

The favourable rating is due to it  being the “world’s second-largest DMF producer”. “As the only significant producer of DMF in Henan Province, Jiutian is well positioned to capture rising demand for DMF given the rapid industrialisation and urbanisation trend in Henan and neighbouring provinces.”

This is coupled with ” stronger ASPs riding on favourable industry dynamics.” “According to Jiutian, many export-oriented countries have seen their manufacturing capacity take a beating in FY20 due to Covid-19 disruptions. This has resulted in general improvements in the export market for China’s manufacturers and in turn, higher demand for DMF.” The potential increase in demand will bode well for Jiutian, especially because of its leader position in the industry.

>> Read more about the company here.

#4 GKE Corporation Limited

CGS CIMB has maintained a BUY rating on the stock with a target price of $0.184.

The first reason is because of its strong results. “1HFY5/21 results above is expectations. GKE Corp’s 1HFY5/21 net profit rose by 260% yoy to S$6.5m, above expectations at 72% of our full-year forecast.”

Future growth is backed by “strong warehousing demand due to enhanced stockpiling. GKE’s warehouse is currently fully utilised due to enhanced stockpiling by some customers, and the company is looking to further optimise its customer base to focus on higher-yield tenants. ”

>> Read more about the company here.

#5 Wilmar International Limited

Maybank Kim Eng has maintained a rating of BUY and has increased its target price to $6.80.

The increased in target price is due to ” better than expected operating environment where 4Q20 Chinese soybean crushing margins have increased 3x QoQ to reach the highest level since records began in 2015. The 30% 4Q20 rise in palm oil prices may drive upside surprise for WIL’s upstream business, while the recent changes to Indonesian palm oil export taxes should positively impact its refined palm oil exports.”

Revenue from the automotive segment is likely to be better in 2H20 vs 1H20, as the automotive sales have picked up after the end of the global lockdown caused by COVID-19.”

Another factor is o the listed subsidiary of  Wilmar”90% Chinese subsidiary YKA (300999 CH, CNY129.80, NR) has risen 2.2x since its IPO in Oct 20. This means the parent is trading at a 75%
discount on SGX with its other regional businesses having no implied value.

The large valuation differential may catalyse further strategies to unlock value.”

>> Read more about the company here.

#6 Innotek Limited

KGI has initiated a BUY rating on the company with a target price of $0.73.

The main driver of the sentiment is due to ” Stable outlook, that is supported by Chinese demand. InnoTek will see its businesses recover to near pre-pandemic levels, with a Chinese-driven tailwind for its automotive business.”

Moreover, the impressive nature of the “twin turnarounds of the company, will aid the improvement

Apart from the restructuring back in2014/2015, InnoTek was able to manoeuvre around a weak COVID-induced 1Q20 performance and produce a resilient 2Q20 result that saw YoY performance improvement.”

>> Read more about the company here.

#7 CapitaLand Retail China Trust

DBS has maintained its buy rating on the company with a target price of $1.70.

The positive sentiments are because ” China is leading the recovery post COVID-19. Green shoots
emerged within China’s retail sector in August as retail sales turned positive for the first time in 2020.

This should have translated to improvements in shopper footfall and tenant sales for CRCT. September retail sales growth was even stronger at 3.3% y-o-y, indicating that retail spending may have returned
with a vengeance in recent months”

>> Read more about the company here.

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Tags

Capitaland retail china trust, food empire, fortress minerals, gke corp, Innotek, jiutian, SGX, Wilmar


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