By Say Cheong //
December 22, 2021

One of the major theme for the month of November was Telsa’s stocks unstoppable push towards multiple all time highs. Many new millionaires and even billionaire were produced from this incredible price movement. Singapore also has its fair share of all-time highs with DBS hitting never before seen levels.

Stocks became relatively more volatile as inflation rates in USA are hitting above its 2% target, forcing Fed to taper on its bond purchases and also keeping an eye on the interest rate.

Singapore has its own good amount of interesting stocks. Here are 7 interesting stocks that you should take note of in the month of December.

#1 AEM Holdings

Maybank Kim Eng has maintained its Buy rating on the stock with a target price of $5.77.

Good earnings and improvement in the supply chain are the two main driving forces behind the favourable valuation.

“3Q21 PATMI of SGD23.3m (-4.3% YoY, +42.7% QoQ) was ahead of our expectation but in line with consensus. The sequential recovery was driven the volume ramp of new generations of equipment for Intel. We raise our FY21E EPS by 5% to factor in the increased FY21E revenue guidance, but keep FY22-23E largely unchanged pending FY22E guidance in early 2022.

Management is mindful of supply side challenges, but they presently do not expect these to cause shipment delays.

AEM’s supply chain team overcomes these challenges by planning with suppliers and distribution channels ahead of time, as well as in certain instances design alternate parts.”

>> Read more about the company here.

#2 Frasers Logistics & Commercial Trust

UOB Kay Hian has maintained its Buy rating on the company with a target price of $1.79.

The growth from its acquisitions and the positive rental reversions are reasons why the analyst have a positive rating.

“Revenue and NPI increased 11.4% and 12.3% yoy respectively in 2HFY21 due to acquisition of six European properties completed on 24 May 21 (more than four months of contributions), which was partially offset by divestment of three leasehold logistics properties in South Australia.

FLT has completed 151,975sqm of new/renewed leases in 4QFY21. In Australia, rents for logistics space in Sydney, Melbourne and Brisbane increased 3.7%, 8.3% and 3.5% yoy respectively to A$149, A$102 and A$119 per sqm per year.

Rents in Germany and Netherlands are currently €90 and €85 per sqm per year respectively and there is upward pressure due to strong take-up and limited supply.

However, market rents have generally not kept up with the recurrent and compounding annual escalation of 3.1%, which resulted in negative rental reversion of 3% in 4QFY21. The commercial portfolio achieved positive rental reversion of 0.2%, driven by positive rental reversion of 0.9% for properties in Singapore. ”

>> Read more about the company here.

#3 DBS Group

Maybank Kim Eng has maintained its Buy rating on the company with a target price of $37.03.

Regional recovery and new investments of the bank are the impetus of the rating.

“DBS’ 9M21 PAT was ahead of MKE and Street, supported by provision reversals. The Group continues to have excess reserves that could potentially surprise earnings on the upside going forward.

Operationally, we expect loans & fees – especially wealth, transaction banking and credit cards – to see rising momentum. Increasing investments in digital, AI, retail wealth as well as India and China geographically could create new pathways for higher ROEs in the medium term, in our view”

>> Read more about the company here.

#4 Propnex

UOB Kay Hian has maintained a Buy rating on the stock with a target price of $2.17.

Strong results coupled with positive outlook of the management were some reasons why the analyst has a good rating on the company

“Propnex reported a strong set of 3Q21 numbers with revenue doubling yoy to S$234m while net profit more than doubled to yoy to S$15.5m. This was the result of a higher number of transactions completed in 3Q21 following improvements in Singapore’s COVID-19 situation and an improving economy.

In particular, we highlight that the strong results were generated by the company’s three key market segments, ie new launches, private resale and HDB resale, which all saw strong yoy growths. Its 9M21 net profit of S$49.8m accounted for 77% of our full-year 2021 forecasts, which we deem as largely in line with our expectations.

The company highlighted its confidence in being able to maintain a revenue base of S$200m per quarter going forwards given its high market share and material advantage in numbers in terms of property agents.

Propnex stated that with >50% of the HDB resale market share, it will be able to continue building on this as a driver of its earnings base. In addition, the company is targeting to increase its total number
of agents to 12,000 by 2023.”

>> Read more about the company here.

#5 Hongkong Land Holdings Ltd

CGS CIMB has maintained its ADD rating on the stock and with its target price at $6.30.

Share repurchase program and the potential uplift of its Hongkong portfolio drove the positive view of the analyst.

“As of end-1H21, HKL’s Central office vacancy was 6.4%, below 7.4% for overall Central office. Even though negative rental reversions may continue in 2H21F (average expiring rent is c.13% higher than its latest average monthly net rent), lower rents make its portfolio competitive for retention or acquisition of key tenants.

We believe its vacancy reached a short-term peak at end-1H21 and will moderate in 4Q21F and 1H22F, as the HKSAR Government is planning to reopen borders with mainland China as local Covid19 cases have subsided.

We lift our FY21-23F EPS by 0.2-1.4% to factor in its smaller number of shares outstanding after the share repurchase.”

>> Read more about the company here.

#6 Prime US REIT

Maybank Kim Eng has maintained its BUY rating on the company with a target price of $1.10.

Prime US REIT has positive leasing momentum, and have experienced rental reversion trend which bodes well for its stock price.

“It leased c.187k sf in 3Q21 at +19.2% rental reversion, up from c.52k sf in 2Q21 at +10.5%, and c.80k sf in 1Q21 at +8.5%. Most were renewals, while 17.5% were from new leases.

Half of leasing activity was attributed to AGG (at 3.0% of cash rental income), as it extended its lease at 17th Street till 2035, at +25% reversion, but downsized its footprint from c.122k sf to c.98k sf. Expiring leases in 4Q/FY22 are low at c.2-10% with nine (of 14) properties at sub-1%.

With in-place rents at Reston Square 14.7% above passing rents, negative rental reversions for its 2.6% expiries are likely.”

>> Read more about the company here.

#7 Oversea-Chinese Banking Corp

UOB Kay Hian has upgraded its Buy rating on the company with a target price of $15.35.

Improvement in the general environment coupled with the increase in earnings of its operations and subsidiaries are driving OCBC’s bottom line thus better stock price representation.

“Benefitting from recoveries and upgrades. NPL ratio was unchanged at 1.5% (rise in new NPL formation was offset by higher recoveries, upgrades and write-offs). New NPL formation was largely due to downgrades of secured consumer loans in Malaysia.

Specific provisions of S$185m were mainly for corporate and consumer loans in Malaysia and Indonesia. Credit costs moderated to 21bp in 3Q21, receding from 30bp in 2Q21.

Pick-up in loan and deposit growth. Loans expanded 6% yoy and 4% qoq, led by Singapore (+4.5% qoq) and Greater China (+4.3% qoq).

The pick-up was broad-based across corporate and consumer loans. Deposits grew 8% yoy, driven by expansion of 13% yoy for current and savings accounts (CASA) deposits”

>> Read more about the company here.

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