[SG] 7 Interesting Stock Ideas for February 2022

February 2022

The tumultuous January will definitely be a one to remember in every investor’s memory. Stock markets across the world led by USA dropped immensely at the back of interest hike expectations.

S&P 500 was at one time 10% from its peak and technology stocks such as Meta, Nvidia took major hits as investors move to safer havens.

Stocks in Singapore were also affected and this could be considered an opportunity for investors to scoop up some mispriced stocks.

Here are 7 stocks that you should put into your note pads.

#1 Aztech Global

UOB Kay Hian has maintained its Buy rating on the stock with a target price of $1.55.

The healthy orderbook and the recent more than expected price correction are the reasons behind the analyst’s favourable ratings.

“Recent share price correction presents good buying opportunity. Aztech share price has corrected by more than 30% since its IPO in Mar 21, where the majority of its correction took place in the last two months of 2021.

We believe the correction is attributable to three factors: a) concerns over components shortages, b) fear of labour issues as one of Aztech’s industry peers, ATA IMS Bhd (AIB MK) suffered a massive share price correction after its largest customer stopped ordering from AIB MK due to labour infringement issues, and c) year-end portfolio rebalancing by institutional investors in paring down underperforming holdings.

Operations remain intact with healthy orderbook. We understand that Aztech’s facilities are currently enjoying high utilisation rate and it is managing the components shortages well on the back of: a) leveraging the strong brand name of customers, b) maintaining its good long-term relationship with suppliers, and c) modifying the product designs to switch reliance to parts that are more readily available.

The sequential improvement in net margin also proves Aztech’s ability to manage the components shortages well (11.4% in 1Q21, 12.1% in 2Q21 and 12.8% in 3Q21). In addition, we also note that Aztech’s orderbook remains healthy, where orderbook strength improved with orders at S$636m as at 14 Oct 21 (1 Oct 21: S$569m), of which S$426m are scheduled for delivery in 2022 and S$210m for 4Q21. ”

>> Read more about the company here.

#2 AEM Holding Ltd

CGS CIMB has maintained its Add rating on the company with a target price of $7.90.

The higher than expected revenue guidance was the major impetus behind the rating.

“Initial FY22F revenue guidance is 2.1-9.7% above our FY22F revenue forecast. We think there is leeway for AEM to raise FY22F revenue guidance as the year progresses.

Even in FY21F when revenue came off a record FY20, the initial FY21F revenue guidance was S$460m-520m (3 May 2021) before being raised to S$525m550m on 10 Nov 2021

Potential re-rating catalysts are stronger-than-expected orders from its major customer and earlier-than-expected success in securing orders from other prospective customers”

>> Read more about the company here.

#3 Aoxin Q&M Dental Group

UOB Kay Hian has maintained its Buy rating on the company with a target price of $0.37.

The recent proposed listing on Nasdaq is going to unlock lots of opportunities and value for the company.

“Our basecase estimate using 22x 2021F PE for Acumen, based on Q&M Dental’s historical mean PE, will unlock value of S$216m (S$0.42/share) for Aoxin.

Expects to reap many benefits from listing in one of the most prestigious platforms in the world. The reasons for choosing NASDAQ is because it is one of the most well-known listing platforms in the world.

Nasdaq is known for its technology, innovation, and it is home to digital, biotechnology, and other cutting edge companies. In addition, Acumen believes that having a listing status in a leading global capital market of the status of NASDAQ is beneficial as this provides Acumen with ready access to the world’s largest economy, an expanded investor base and additional sources of financing.

The proposed NASDAQ listing is also an excellent opportunity for ADPL to enhance its corporate profile as it seeks to further expand its business.”

>> Read more about the company here.

#4 United Overseas Bank

CGS CIMB has maintained its Add rating on the stock with a target price of $33.50.

The recent acquisition of Citibank’s assets are going to boost UOB’s top and bottom line.

“UOB announced that it w ill be acquiring Citigroup’s consumer businesses in Indonesia, Malaysia, Thailand and Vietnam. The transaction is valued at 1.2x P/BV, with the acquisition of the TH business driving this.

Although slightly higher than the average 0.9x FY22F P/BV valuation of TH banks, we think the premium is justified given the boost to UOB’s market leadership in these countries.

Synergies from the combination of UOB’s and Citigroup’s assets are expected to result in S$1bn in incremental annual income w hen integration is completed (on a pro-forma basis), which w ill drive >13% ROE by 2026 (from c.10% currently, c.2% pts of the uplift is expected to stem from rising interest rates), as income from these 4 markets rise 1.4x.”

>> Read more about the company here.

#5 Wilmar International

UOB Kayhian has maintained its Buy rating on the stock and with its target price at $6.00.

Strong performance from its core assets is one of the strongest reason behind this valuation.

“Strong performance from plantation and sugar milling. The plantation and sugar milling divison, which is the upstream operation for Wilmar, is expected to see significant earnings increase yoy and hoh in 2H22.

For 1H21, this division only contributed about 13% of 1H21 profit before tax (PBT), but this is expected to increase to 22-25% of 2H21 PBT on the back of strong selling prices. CPO and sugar price increased by 35% and 26% yoy respectively in 2021.

2021 is likely to best earnings year for this division since 2016.”

>> Read more about the company here.

#6 Keppel Corp

UOB Kayhian has maintained its BUY rating on the company with a target price of $6.94.

Stronger than expected results and the opportunity for a bid dividend payday are driving the sentiments.

“Keppel Corp (KEP) reported stronger-than-expected 2021 revenue which rose 31% yoy to S$8.6b generating a net profit of $1.02b vs a loss in 2020.

Importantly, KEP reported sequentially better profitability as its 2H21 net margin doubled to 14.6% vs 1H21. These robust results were attributable gains from divestments and asset sales, as well as stronger operating performances from its property, connectivity and asset management businesses.

Since Oct 20, KEP has divested around S$2.9b and is on track to exceed its S$5b target by 2023. As a result of this cash inflow, the company declared a 2H21 dividend of S$0.21 resulting in a total dividend of S$0.33 for 2021, which implies a yield of 6.2% using today’s closing share price.

We have maintained our forecast 40% dividend payout ratio for 2022-24.”

>> Read more about the company here.

#7 Mapletree Industrial Trust

UOB Kay Hian has maintained its Buy rating on the company with a target price of $3.72.

Accelerated growth driven by acquisitions of data centres and stable occupancies rate make the company attractive.

“Gross revenue and NPI grew 31.3% and 24.1% yoy respectively in 3QFY22 driven by: a) the acquisition of 29 US
data centres completed on 22 Jul 21, and b) the acquisition of 8011 Villa Park Drive in Richmond, Virginia completed on 12 Mar 21.

Portfolio occupancy was relatively unchanged at 93.6% in 3QFY22. Occupancy for its Singapore portfolio edged marginally higher by 0.1ppt qoq to 93.7%, driven by Business Park Buildings (+0.4ppt qoq to 83%) and Stack-up/Ramp-up Buildings (+1.2ppt qoq to 97.6%).

Occupancy for data centres moderated 0.6ppt qoq as the 29 newly-acquired data centres in the US have lower average occupancy of 87.4%.”

>> Read more about the company here.

Billionaire Warren Buffett is arguably the most successful investor of all time.

Learn the secrets to Warren Buffett’s investment success by downloading the Free Guide below:

Download FREE Guide – Warren Buffett’s 12 Secrets.

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}
Subscribe to get the latest updates
>