7 Interesting Stock Ideas for May 2022 [SG]

May 2022

The US stock markets have ended April with a bad note. And things are going from bad to worse as the US tech stocks are just free-falling.

That said, Singapore stocks have stayed pretty resilient during this time; maybe because we are quite stable even when the US markets are roaring in the past.

It may be better to turn inwards to Singapore stocks amid the carnage. Here are 7 stocks that analysts are bullish on.

Stock Idea #1 Far East Hospitality Trust

UOB Kay Hian has maintained its Buy rating on the stock with a target price of $0.82.

The reopening of international borders is the biggest push for the good rating.

“Outlook has improved with the rapid reopening of international borders in Apr 22.

Three hotels under government contracts were redeployed to serve business and leisure travellers in 1Q22 while serviced residences benefitted from the sustained increase in long-stay corporate and project groups. We forecast that FEHT’s distribution yield will improve to 5.7% in 2023.”

>> Read more about the company here.

Stock Idea #2 Aztech Global Ltd

CGS CIMB has maintained its Add rating on the company with a target price of $1.59.

Solid order book is one of the strongest impetus behind the good valuation.

“Aztech guided that the electronics supply chain and its operations remain vulnerable to new Covid-19 outbreaks in China and lockdowns.

Aztech has been actively managing customer orders and balancing them across its manufacturing plants in China and Malaysia to ensure timely delivery to customers. As at 18 April 2022, Aztech’s order book for fulfilment in FY22F amounted to S$713.0m.”

>> Read more about the company here.

Stock Idea #3 Yangzijiang Shipbuilding Holdings

UOB Kay Hian has maintained its Buy rating on the company with a target price of $1.95.

The analyst believes that the company is severely underrated at current prices, thus a good opportunity for investors.

“We highlight that YZJ’s current share price, excluding YZJFH, implies a P/B of less than 0.5x which in our view materially undervalues the company.

Since its IPO in 2007, YZJ has significantly grown and transformed its shipbuilding business, and in addition has the tailwind of high asset prices and charter rates that will benefit its
shipping fleet.

Yangzijiang’s book value per share excluding Yangzijiang Financial Holding (YZJFH) would equate to S$0.96 per share as at end-21, comprising of: a) S$0.75 for the shipbuilding segment, b) S$0.09 for the shipping business, and c) S$0.12/share for the trading business.

If we subtract YZJFH’s book value of S$1.09 from yesterday’s closing share price of S$1.56, the remaining value of S$0.47 implies a P/B of 0.49x which is a material undervaluation of the company in our view.”

>> Read more about the company here.

Stock Idea #4 ComfortDelgro

CGS CIMB has maintained its Add rating on the company with a target price of $1.80.

The easing of COVID 19 measures are bound to aid the company to return back to its good times.

“While the surge in Covid-19 cases arising from Omicron variant has dampened mobility from Dec 21 to Feb 22, Google Mobility showed meaningful recovery across CDG’s key geographies (Singapore, UK, Australia) in Mar, in line with easing Covid-19 restrictions.

We expect further recovery in 2Q22F, with the Singapore government taking a decisive step towards the nation’s reopening.

Gathering size limit doubled to 10 effective 29 Mar, sale and consumption of alcohol was allowed beyond 10:30 pm, and up to 75% of employees were allowed back to office (from 50%).

Border restrictions were also largely lifted, as vaccinated travellers into Singapore are no longer required to take designated vaccinated travel lane (VTL) flights or undergo an ART test within 24 hours of arrival. ”

>> Read more about the company here.

Stock Idea #5 Wilmar International

UOB Kay Hian has maintained its Buy rating on the stock and with its target price at $5.50.

Expected good earnings from its palm oil and sugar operations are going to be a good boost to the company.

“There is a high possibility that Wilmar’s 1Q22 core net profit will largely be contributed by its palm-related operations, especially from upstream.

Upstream earnings will be boosted by the strong CPO ASP, while sales volume may be lower yoy due to lower production and also trade disruption from domestic market obligations in Indonesia in Feb 22 and early-Mar 22.

In addition, India sugar also should see good contribution on better raw sugar production in India and steady selling price.

Contribution from its China operations is expected to be weak given that the consumer pack business still suffered from great margin pressure from high raw material prices and soybean crushing margins have not been good as well. ”

>> Read more about the company here.

Stock Idea #6 Mapletree Industrial Trust

CGS CIMB has maintained its Add rating on the company with a target price of $3.08.

Stable occupancy rates and good results are the two main reasons for the good rating.

“Its US DC portfolio had an average occupancy of 93.3% as at end-2Q. MINT has some US DC leases expiring from FY23F onwards.

Management indicated that a portion of these leases, in San Diego, have been de-risked with an extension into 2024F.

MINT also indicated that it targets to grow its DC exposure from 54% as at end-4Q to two-thirds of its asset under management (AUM) in the medium term.

MINT’s gearing stood at 38.4% at end-4Q while its all-in cost of debt ticked up qoq to 2.4%.

In terms of interest rate sensitivity, a 50bp increase in average funding cost could erode its DPU by 0.13 Scts, in our estimate.

MINT reported a 35.5%/35.3% yoy rise in 4QFY3/22 revenue/NPI to S$164.1m/ S$124.2m, due to acquisition of an US data centre (DC) portfolio in North America.

4Q DPU rose 5.8% yoy to 3.49 Scts on higher contributions as well as distribution of divestment gains from 26A Ayer Rajah Crescent.

4Q/FY22 DPU of 3.49/13.8 Scts were above expectations, at 26.7%/105.8% of our full-year forecast.”

>> Read more about the company here.

Stock Idea #7 Sembcorp Industries

UOB Kay Hian has maintained its Buy rating on the company with a target price of $3.59.

The green energy acquisitions administered are bound to bring the company good returns.

“While a number of the projects above are still in the planning stage, we highlight that SCI has built up its renewables portfolio quite aggressively from 2.6GW gross installed capacity at the start of 2021 to 5.3GW at present – this excludes another 1.1GW that is currently under development.

Thus, we believe that the company is on target to achieve its plans of increasing its renewable capacity to 10GW by 2025.

In Oct 21 and Apr 22, SCI raised a total of S$975m in sustainability-linked notes, all of which were well subscribed and thus underlining the market’s confidence in the company’s strategy”

>> Read more about the company here.

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