[SG] 7 Interesting Stock Ideas for April 2022

April 2022

March has passed by in the blink of an eye. The seemingly never-ending war is still ongoing and has caused upheaval in both the stocks and commodities market.

Oil has breached the USD 100 per barrel mark and NASDAQ was once in correction territory. The market has since recovered with spouts of good news from Ukraine and Russia.

The silver lining is that many countries are opening up, leading to a recovery in global economies again despite the lingering inflation fears.

Here are 7 interesting stock ideas that you can keep a lookout for.

Stock Idea #1 Singapore Exchange

CGS CIMB has maintained its Add rating on the stock with a target price of $10.40.

The potential recovery in treasury income is the main impetus for the favourable rating.

“We expect SGX’s share price to be supported by elevated financial market volatility as the recovery of treasury income gets priced in.

With the Fed kicking off the interest rate cycle with a 25bp hike in Mar 22 whilst signaling for 6 more over the course of CY22F, we see scope for an expedited recovery of SGX’s treasury income in FY23-24F, albeit with a lag (c.6-9 months after Fed hike)”

>> Read more about the company here.

Stock Idea #2 Mapletree Commercial Trust

UOB Kay Hian has maintained its Buy rating on the company with a target price of $2.48.

The outstanding strategy and the opening up of Hong Kong boasts well for the company.

“The merged entity MPACT will adopt a 4R asset and capital management strategy to drive future growth: a) Recharge – maximise operational performance,

b) Reconstitute – optimise portfolio through divestment, asset enhancement and redevelopment,

c) Refocus – pursue accretive acquisitions and developments and

d) Resilience – capital management strategy to maintain a strong balance sheet, maximise liquidity and minimise risk. MPACT will focus on acquisitions of office and business park assets in key gateway cities such as South Korea, Singapore and Mainland China.”

>> Read more about the company here.

Stock Idea #3 Keppel Corporation

CGS CIMB has maintained its Add rating on the company with a target price of $7.20.

The increase in share buyback from the management shows recognition of the company’s future.

“Share buyback up to 5% (from 2%). KEP has also proposed to increase its share buyback limit to 5% (from 2%) in its AGM. Note that, in Jan 22, it announced a committed S$500m share buyback (up to 2% of its issued shares).

We see the increase as KEP’s commitment and management’s response to the discounted valuations. Catalyst for share price outperformance is a faster-thanprojected pace of asset recycling, and the proposed merger with SMM at favourable terms.”

>> Read more about the company here.

Stock Idea #4 Thai Beverage

UOB Kay Hian has maintained its Buy rating on the company with a target price of $0.90.

The return of tourism is the main driver behind this positive rating

“Thailand scrapped the need to show a negative pre-departure PCR test starting 1 Apr 22. Instead, only a negative on-arrival PCR test and a negative ART result on the 5th day of travel are required. The minimum insurance coverage required was also reduced from US$50,000 to US$20,000.

In Vietnam, the country has fully reopened its international borders since 15 Mar 22, whereby only one negative PCR (72 hours predeparture) or ART test (24 hours pre-departure/upon arrival) is required before entering the country quarantine-free.”

>> Read more about the company here.

Stock Idea #5 Lendlease Global Commercial REIT

CGS CIMB has maintained its Add rating on the stock and with its target price at $0.95.

Enhanced income resilience and general opening of the country are main reasons for the good ratings.

“We like LREIT for its resilient income underpinned by the built-in rental escalation from >90% of its portfolio NLA and the long-lease structure (until 2032 with break lease option in 2026) of Sky Complex, Milan.

The acquisition of Jem will further strengthen its income resilience. Post-acquisition, suburban mall contribution will increase from just c.16% to c.47% of AUM while essential services trade will improve 7% pts to 59% of the total GRI.

We understand that Jem’s tenant sales recovered to pre-Covid level in 1HFY6/22 and we expect more income upside potential from future developments in the surrounding areas.”

>> Read more about the company here.

Stock Idea #6 Capitaland Integrated Commercial Trust

Maybank Kim Eng has maintained its BUY rating on the company with a target price of $2.55.

The quality of assets and the resilient residencies are driving the positive review of the company.

“CICT has partnered with CapitaLand Open-End Real Estate Fund to acquire 79 Robinson Road in Singapore for SGD1.3b from Southernwood Property (an SPV owned by sponsor CLI and Mitsui & Co/ Tokyo Tatemono). It will pay SGD869m for a 70% stake, which will be funded by debt (62%) and proceeds from the divestment of JCube, implying a +2.9% DPU accretion.

We are positive on the deal, against a strong office rental upcycle, with contribution from this segment set to rise to 41% (from 38%) of CICT’s enlarged SGD24.2b AUM. We see improving fundamentals, with further acquisition upside, backed by its sponsor’s Singapore pipeline.

The property is a 29-storey, c.520k sf NLA Grade A office tower completed in Apr 2020 and rated BCA Green Mark Platinum, with a remaining land tenure of 45 years.

It is in Tanjong Pagar, and will be connected to the MRT station by an upcoming underground link, and is 500 metres from two new MRT stations on the Thomson East-Coast Line.

It had 92.9% committed occupancy as of end-Dec 2021 and a 5.8-year WALE, which is backed by 22 reputable tenancies, with the top three – Allianz, Equinix and The Boston Consulting Group – accounting for 48% of its gross rental income.”

>> Read more about the company here.

Stock Idea #7 Japfa Ltd

CGS CIMB has maintained its Add rating on the company with a target price of $0.81.

Potential listing of its subsidiary could unlock new values for the company.

“We believe that JAP could crystalise AIH’s total equity valuation of US$1,168m, w hich we derive from the sale of a 12.5% stake in AIH to private companies Genki Forest Technology Group Holdings, Honest Dairy Group Co. Ltd, and GGG Holdings Limited undertaken by JAP in FY21.

The valuation translates into a forward EV/EBITDA and P/E ratio of 11.6x and 13.1x, respectively (Fig 1), which appears to be a premium over its China dairy farming peers’ 4.7x and 5.3x, respectively (Fig 2).

Nevertheless, we believe the premium is a result of several factors, including: (1) best-in-class milk yields (Fig 3) among industry players as well as (2) an increasing portion of downstream businesses for AIH (Fig 4), which could suggest a shift in valuations closer to downstream players moving forward.

Furthermore, the persistent demand-supply gap continues to support buoyant raw milk prices (Fig 5) that are able to offset rising feed costs, with increasingly limited land suitable for cattle farming”

>> Read more about the company here.

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