CapitaLand | Buy
Target price: $4.25
June 28 close: $3.13
Broker: RHB, June 28
CapitaLand remains our top large-cap pick. Its latest acquisition of a Chongqing site is a timely move to replenish its land bank. We believe the recent share price weakness stems from macro concerns on an escalation in global trade tensions that resulted in fund outflows from equities.
Fundamentally, we expect sales and prices across its residential project in China to remain steady. We also expect it to benefit from a continuous build-up in its recurring income base, with eight malls opening last year and a higher fee income.
Sheng Siong | Buy
Fair value: $1.12
June 28 close: $1.06
Broker: OCBC Investment, June 28
In times of volatility, given the trade tensions between the US and China as well as Europe, we believe Sheng Siong Group (SSG) offers certainty over its earnings outlook backed by a resilient business model. With nearly 100 per cent exposure to Singapore (except for a new start-up store in China), and selling mainly consumer staples, we expect SSG's business to be relatively unaffected by the ongoing trade spat in other parts of the world. We expect the 5.6 per cent same stores sales growth recorded in the first quarter of 2018 to be sustainable for fiscal year 2018. We continue to like SSG for its resilient business model supported by strong cash flow generation and solid balance sheet.
Cache Logistics Trust | Hold
Target price: 80 cents
June 28 close: 76.5 cents
Broker: CGS-CIMB, June 25
We see the consolidation of ownership and decision-making as positive for Cache. Over the past three years, the trust has embarked on a portfolio rebalancing and growth strategy, particularly in Australia.
With a greater alignment of interest with ARA, we believe the trust would continue to be able to tap ARA's expanding presence and network in the Asia-Pacific region. In addition, the amalgamated interest in the property manager would also ensure good continuity in the management of Cache's properties.
Megachem Limited | Buy
Target price: 50 cents
June 21 close: 32 cents
Broker: SAC Advisors, June 26
Megachem is an integrated solutions provider for speciality chemicals.
Its key advantage lies in its wide global distribution network that offers a one-stop solution and just-in-time delivery, thanks to its sophisticated IT and supply chain management system. Unlike commodity chemicals, demand for speciality chemicals is relatively insensitive to price changes. This, coupled with Megachem's diversified customer base and industry reach, contributed to a strong track record of stable revenue and gross margins.
We expect the group to deliver top and bottom line growth in the next three years, driven by (i) a burgeoning global economy, in particular higher demand for construction, electronics and water treatment; (ii) strong demand from Asia; (iii) focus in the higher-margin biotech segment; and (iv) higher demand for contract manufacturing services.
StarHub | Neutral
Target price: $1.90
June 27 close: $1.69
Broker: RHB, June 27
A failed negotiation with Discovery Networks on fair pricing will see 11 pay-TV channels axed in stages over the next two months.
New CEO Peter Kaliaropoulos has his work cut out for him but expectations are high... (His) most recent stint was with Zain in Saudi Arabia, where he led the company to its maiden profit in 2017 after a decade of operations.