June 4

[SG] 7 Interesting Stock Ideas [June 2021]

May has been an unfortunate month for Singapore with a resurgence in COVID cases. Singapore has heightened its measure by limiting crowd flows in hawker centers and shopping malls. These measures are definitely a bane to businesses especially retail and F&B sectors.

However, there are still several companies which are able to thrive during these tough times and analysts are optimistic about.

We have identified 7 such companies for the month of June you should take note of.

#1 UG Healthcare Corporation Ltd

Phillips Capital has maintained BUY rating on the stock with a target price of $0.85.

Two main reasons are because of the “stellar gross margins. Gross margins more than tripled from a year ago to 62.7% and Cash build-up from record earnings. Record earnings raised net cash to S$49.9mn from 2Q21’s S$32.5mn”

Moreover  “UG is also on track to expand capacity by 58% from 3Q21’s 2.9bn to 4.6bn in FY22. Net expansion is 1.7bn, with 500mn already commissioned in April and the remaining 1.2bn to begin from July 2021.

Our FY22e revenue growth forecasts are premised on this surge in capacity. Plans for
another factory after this phase will be announced when they are finalised.”

>> Read more about the company here.

#2 City Developments Ltd

UOB Kay Hian has maintained its BUY rating of the company with a target price of $8.50.

The main driver of the positive sentiment is the ” potential IPO of its UK commercial assets. We understand that the Qatar Investment Authority, the 11th largest sovereign wealth fund globally, is looking to inject its property in London’s Canary Wharf, which houses HSBC’s head office, into CDL’s UK commercial REIT.

We view this development in a positive light as it would bulk up the REIT, bring in a long-term investor, and give the REIT an asset that we assume has a long weighted average lease to expiry.

The IPO of this REIT had been delayed from last year due to COVID-19 and is currently targeted for 3Q21.”

>> Read more about the company here.

#3 Prime US REIT

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

The positive sentiment is because “PRIME delivered a stable 1Q21, and like its peers, saw strong leasing
momentum, albeit mostly from renewals. Improving market fundamentals should support demand recovery, with occupancies in our view, likely to bottom out in 2H21.

DPU visibility is high, from its 4.3-year WALE, strong tenancies, and +2.0% pa growth from its AUM, currently under-rented by 6.5%. We see catalysts from improving leasing activity into 2021, and upside from acquisitions, backed by its strong balance sheet.”

Another important factor is its “strong balance sheet, which scores well against peers.

Its leverage remains low at 33.8% (from 33.5% at end-Dec 2020), with USD290m debt headroom (at 45% limit). PRIME ranks well against its US office S-REIT peers on operational metrics and capital management, with low near-term leasing and refinancing risks.”

>> Read more about the company here.

#4 Sembcorb Industries Ltd

UOB Kay Hian has maintained its rating on the company with a BUY rating on the stock with a target price of $2.59.

The conviction of the analysts comes from the fact that “SCI’s Investor Day profiled a long-expected move towards a greener future, focusing its business growth on renewable energy and sustainable urban development as well as a pledge to deliver net-zero carbon emissions by 2050.

While the results will take time, we view SCI’s move positively and it could lead to the market applying an “ESG premium” to the stock. ”

>> Read more about the company here.

#5 Boustead Projects Limited

CGS CIMB has maintained a rating of ADD and with its target price at $1.40.

The remarkable future of the company is due to a “strong balance sheet to chart the next leg of growth.

With the capital recycling, BP has a strong net cash position of S$296m as of endFY21F. Together with its network of strategic platforms and partnerships, we believe BP will be able to accelerate its international expansion plans as its next leg of growth.

A target market could be Vietnam, where BP recently signed agreements to acquire a 49% stake of 16 ready-built factories in Bac Ninh Province”

>> Read more about the company here.

#6 Far East Hospitality Trust

UOB Kay Hian has maintained its BUY rating on the company with a target price of $0.71.

The main driver of the sentiment is mainly because of ” the increase in infections due to the new variants of COVID-19 has resulted in increased demand from the government for SHN facilities and public hospitals for accommodation for healthcare workers.

Public hospitals have bulk-booked hotel rooms to provide accommodation for their healthcare workers. Many healthcare workers prefer to stay at hotels as a precautionary measure to ensure they do not
unwittingly infect their children and vulnerable parents with COVID-19.”

>> Read more about the company here.

#7 Mapletree Industrial Trust

Maybank Kim Eng has maintained its BUY rating on the company with a target price of $3.25.

The extremely positive sentiment is because of the “adding to US data centres.

MINT has picked up its pace on acquisitions with its latest USD1.32b US data centre deal. The investment, at an initial 5.1% NPI yield is DPU and NAV accretive.

It should boost the segment’s contribution from c.41% to c.54% of its AUM, while strengthening DPU visibility from a longer 4.6-year WALE (from 4.0 years).

With its portfolio recalibration plans well underway, we see further DPU-accretive deals, as management advances diversification efforts to deepen data centre concentration to 50-67% of\ AUM”

>> Read more about the company here.

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Tags

boustead, City development, Far east hospitality trust, mapletree industrial trust, prime us reit, sembcorp, Singapore stocks, UG Healthcare


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