[SG] 7 Interesting Stock Ideas for November 2021

November 2021

The month of October was filled with excitement as first ever Bitcoin ETF started trading and got approved by the SEC. It was also a nerve wrecking one as USA nearly defaulted on its debt when its debt ceiling could not be increased.

That said, many SG local stocks are still going strong, underpinned by the positive re-opening news around the world.

Here are 7 stocks that analysts are bullish in the month of November.

#1 Wilmar International

UOB Kay Hian has maintained its Buy rating on the stock with a target price of $6.40.

Better than expected earnings is an impetus to the favourable rating of the stock.

“Wilmar International (Wilmar) is scheduled to release its Executive Financial Summary for 3Q21 after trading hours on 29 Oct 21. We are expecting a core net profit of US$450m-480m for 3Q21 (vs 2Q21: US$309m, 3Q20: US$500m), which is better qoq with better contribution from the recovery of China’s soybean crushing operation and also better consumer pack sales.

While sugar contributions are usually higher in 2H when sugar milling season starts. Tropical oil will be again the star performer with greater volume and better margins from its timely purchase of raw materials. Based on our estimates, Wilmar’s 3Q21 core net profit is likely to be lower yoy given that 3Q20 was an exceptionally strong quarter”

>> Read more about the company here.

#2 China Sunsine Chemical Holdings

CGS CIMB has maintained its ADD rating on the company with a target price of $0.77.

The rising upstream commodities prices boosted the positive outlook of the company as profits are likely to increase.

“Post the c.20% correction in rubber accelerator prices between mid-Apr to early-Aug, we note that pricing has resumed its uptrend since, and have especially picked up pace in Oct. According to sci99.com, rubber accelerator prices averaged Rmb21.2k/ton in Sep 2021 (+8.6% mom, +42% yoy), and reached Rmb26.2k/ton last week.

We believe that the stronger ASPs are mainly due to higher input costs, exacerbated by lower industry supply due to environmental policies and power curbs impacting the production of some industry players.

Meanwhile, end-products continued to see healthy demand, supported by exports and inventory replenishment of downstream industries. We expect rubber accelerator prices to remain high in 4Q21F.

We expect Sunsine to benefit from the uptrend in accelerator prices, and forecast stronger profit margins in 4Q21F. While key raw material (aniline) prices have also seen an uptick in recent months, we believe this is more than offset by the even-stronger ASP gains. Accordingly, we raise FY21F net profit forecast to Rmb470.5m (+115% yoy).”

>> Read more about the company here.

#3 City Developments Limited

CGS CIMB has maintained its ADD rating on the company with a target price of $8.97.

The company’s positive positioning plan for the future was the main catalyst for the favourable sentiments.” Diversifying development activities beyond Singapore. We expect Singapore residential to continue to form the majority of development contribution in the near term.

Together with the upcoming launch of the 696-unit CanningHill Piers, land parcels in Northumberland Road and Tengah Walk and residential component of Fuji Xerox redevelopment, we estimate CIT has a development pipeline of c.2,000 units.

With residential and land prices remaining elevated, management expects development margins to remain compressed in the near term. The group has also diversified its development activities into Australia, UK, Japan and Vietnam and we anticipate these overseas contributions to gradually pick up in the medium term.”

>> Read more about the company here.

#4 CapitaLand Investment Limited

Phillip Capital has initiated an Accumulate rating on the stock with a target price of $4.00.

The stable and recurring revenue from fees income and real estate investments is a main factor of the rating.

“These segments contribute c.20% and c.80% of EBITDA respectively. Approximately 80% of fee income from the fund management is recurring in nature while the lodging platform generates franchising and management fees from predominantly 3rd party owned assets. Income generating assets held by CLI is also expected to deliver highly visible cashflows”

Growth in fund management and lodging AUM to drive fee income is another factor.

“CLI has made great headway towards hitting its 2024 funds under management (FAUM) target of S$100bn. Two new senior hires, Mr Simon Treacy and Mr Patrick Boocock, have been brought on to spearhead the growth of private funds.

The lodging platform also on track to surpass its 2023 target of 160K keys under management. CLI signed 8.3K keys in 8M21, bringing the number of keys to 130.9K, of which, c.40% are still under development and have not begun contributing to revenue.”

>> Read more about the company here.

#5 Ascendas REIT

CGS CIMB has maintained its ADD rating on the stock and with its target price at $3.31.

The improvement of the overall operating metric in Singapore and the stability in occupancy are the reasons for the positive rating. “Singapore portfolio occupancy rose to 88.5% with higher occupancy at 21 Changi South Ave 2, Techplace I and 9 Woodlands Terrace. Demand came from bio-med, logistics and supply chain management, engineering and lifestyle, retail consumer products segments.

It completed the development of Grab HQ in Singapore at end-Jul 21. Singapore rental reversion averaged +3.6% and was positive across all segments including integrated developments, amenities and retail.

AREIT has a remaining 3.5% and 23.9% of Singapore leases to be renewed in 4Q21F and FY22F, respectively.

AREIT granted 0.5 months of rental rebates amounting to S$0.7m to support F&B and retail tenants in Singapore affected by P2 Heightened Alert. No further details have been shared on the
redevelopment of TUV SUD PSB Building in Singapore.”

“There were no lease renewals within the Australia portfolio in 3Q21 but occupancy improved to 97.5% with a new lease secured in a logistics property in Sydney.

Meanwhile, occupancy in the US slipped to 91.4% due to lower take-up at a property in Raleigh.

Nonetheless, AREIT achieved positive rental reversions of 15% for renewal leases in US portfolio in 3Q. AREIT has 12.2% and 22% of leases in Australia and US expiring in FY22F, respectively.

The bulk of these are in Sydney and San Diego, USA and we anticipate the trust to continue achieving positive rental reversions going forward.”

>> Read more about the company here.

#6 Raffles Medical

UOB Kay Hian has maintained its BUY rating on the company with a target price of $1.66.

The continued demand for PCR testing is likely to drive the top and bottom line of the company.

“With the increasing number of COVID-19 cases in Singapore, demand for PCR swab testing is set to stay.

Raffles Medical Group’s (RFMD) overall PCR swab testing volumes have increased but margins have started to soften due to the introduction and rising adoption of Antigen Rapid Tests (ART).

However, PCR swab test is still considered the gold standard for determining infection and is still required for patients with respiratory symptoms, helping to sustain demand as COVID-19 cases surge in
Singapore.

Inpatient volumes have already exceeded pre-COVID-19 levels due to high domestic patient load. With nine new VTLs, RFMD stands to benefit from its exclusive contract with Changi Airport Group for on-arrival PCR testing. ”

>> Read more about the company here.

#7 Propnex Ltd

UOB Kay Hian has upgraded its ADD rating on the company with a target price of $1.97.

The strong balance sheet and its profit improvement are the reasons for the favourable rating.

“In 1H21, its ROE nearly doubled to 16.3% vs 8.6% in 1H20 while remaining in a net cash position to the tune of S$120.7m (or S$0.33 per share) as at end-1H21.

In addition, the company generated S$19.2m in free cash flow in 1H21 which was a 59% yoy increase from the S$12.1m generated in the year-ago period.

For its upcoming 3Q21 business update, we expect the company to report continued strong transaction volumes from all of its business segments.

Given the time lag between property transactions and actual recognition of revenues and profits, we expect Propnex to continue generating strong results into at least
1Q22.”

>> Read more about the company here.

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