July 2020 is definitely a month to be remembered. Many countries saw the resurgence of the second wave of COVID-19 cases, including America, Vietnam, China and countries in Europe.
It was also the month where NASDAQ index achieved its record high. With so many headlines going on, many must have been confused with what to do with stocks.
Here are 7 stock ideas carefully selected from various sources that will help you to navigate the confusion.
*You can click on the header to read the full analyst report.
#1 Koufu Group
UOB Kayhian has maintained buy on Koufu Group with a target price of $0.78. It is coming off a higher P/E base of 17.2.
The positive news was that “Koufu recently announced a proposed acquisition of Deli Asia, a traditional food and dough products group and one of Koufu’s largest suppliers.
Apart from complementing Koufu’s current range of products, the acquisition would provide operating synergies through the consolidation of manufacturing capabilities of Deli Asia group within Koufu’s new integrated facility in 2H20.”
The acquisition is projected to be “earnings accretive and provides synergies” to the current offerings of the company. Moreover, it “adds to revenue resiliency and expansion of F&B retail brand.”
The acquisition will definitely be a boost to Koufu’s current offerings and are more attractive to investors.
#2 CSE Global
RHB has maintained buy on CSE Global with a target price of $0.54. This comes as it has received a strong backing from Temasek.
Temasek is now CSE Global’s substantial shareholder as it owns 25.03% of the shares after purchasing it from Serba Dinamik.
This is deemed as a positive set of news “for the medium term, premised on Temasik’s solid credentials as well as what the Singaporean Government’s investment arm can offer – CSE may be able to tap on the former’s network, which may also facilitate M&A deals .”
In addition, the “growth strategy is intact”. “With a positive cash flow and a net gearing of only 0.18x, we do not see any issue regarding funding for growth.
Moreover, CSE now has Temasek as a substantial shareholder, which may support the group’s future funding needs for acquisitions.”
#3 Hyphens Pharma International Ltd
Phillips Capital has initiated accumulate on Hyphens Pharma with a target price of $0.435.
There are several investment merits into this company.
Firstly it has “exclusivity as regional product owner for proprietary brands and renowned brand principals from Europe and the United States.”
Secondly, the “expansion of sales into B2C channel in Singapore will increase retail presence of Hyphens Pharma’s product portfolio.”
Last but not the least, it has a “‘Asset-light’ business model that presents strong value creation.”
#4 Riverstone Holdings Ltd
DBS Equity Research has maintained buy on Riverstone holdings with an increase in target price of $3.90.
One of the main reason is because of the huge demand and tight supply of gloves in the world. This will result in higher average selling price, thus margin for Riverstone. “Riverstone’s orderbook is fully locked in till June 2021.
Average selling price (ASP) and margins sky-rocketed to new territory amidst this pandemic outbreak. ASP has been on a rising trend since May 2020, due to the strong demand and tight supply.”
In the longer term, “demand expected to be strong post COVID-19 as hygiene will still be a keen concern going forward.
On the other hand, Riverstone’s cleanroom gloves will benefit from the insurgence of new technologies like 5G, Artificial Intelligence, and Internet of Things etc.
#5 Silverlake Axis
KGI has initiated outperform on Silverlake Axis with a target price of $0.30.
Silverlake Axis has an “established core banking platform that provides recurring revenue.” “Silverlake’s core business comprises of software development of core banking and payment processing.
In addition, the group generates revenue from the licensing fees of its enterprise software platforms. Following implementation of projects to customers, Silverlake subsequently secures contracts that earn a recurring fee from maintenance and enhancement services.”
Moreover for the “FY21/22’s catalyst”, it is in the achieving of Malaysia’s digital banking licenses. Digital transformation remains a key goal across many companies’ agendas, and banks are not excluded.
Digital banks, by having little to no physical infrastructure, have strong potential to achieve improved operational efficiency over traditional banking businesses, thus having capability to provide more for less to customers.
#6 Singapore Medical Group
KGI has initiated an outperform on Singapore Medical Group (SMG) with a target price of $0.34.
As the home base is in Singapore, SMG continues to gain traction in Singapore, with a multitude of brands and clinics, and with little concentration risk.
While its focus remains on the women’s and children healthcare vertical, it has also successfully diversified its revenue streams into segments such as Dental, Diagnostics, and Ophthalmology.
Another compelling point is that SMG has started expanding overseas into Indonesia, Vietnam and Australia which bode well for the company.
As these ventures take off and contribute positively to SMG’s earnings, investors may expect a re-rating of its share price.
# 7 China Aviation Oil
RHB has maintained buy on China Aviation Oil with a target price of $ 1.25.
One of the main factors is that China’s domestic air traffic continues to see a recovery amidst nationwide efforts to resume work and aggressive fare promotions offered by airlines.
Based on information provided by the Shanghai Pudong Airport (SPA), the monthly flights handled by the airport increased 16% and 40% MoM in April and May, aided by a rising domestic traffic.
The US-based airlines have also recently announced plans to resume flights to SPA. United Airlines plans to resume services between San Francisco and Shanghai, with twice weekly flights starting from 8 July.
RHB is also sanguine that China Aviation Oil (CAO) is ‘only’ trading at 2021F P/E of 6.8x, way below the range of multiples of its global jet fuel supplying peers which are trading between 9.4x and 11.8x.
Do you know that China has a whopping 1.3 Billion population size? Any company which can gain a foothold in the space like Haidilao, Tencent, Meituan DianPing can potentially grow beyond our wildest dreams.
Here are 5 China Stocks poised to take advantage of their moats and expand aggressively over the long term. Click here to uncover these ideas in our FREE Special Report!