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UOB KAYHIAN |
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Singapore Exchange (SGX SP) Derivatives Slower In October-November
Maintain NEUTRAL with new SGD8.80 TP from SGD8.30 pegged to 23x FY21F (Jun) P/E, 1% downside – we raise our TP as we roll over valuation one year forward. While 2QFY20 securities average daily value (SADV) was up a respectable 9% YoY, derivatives trading for Oct-Nov 2019 was down 15% YoY. SGX’s earnings strength for 1QFY20 was mainly driven by derivatives trading for commodities and currencies – and derivatives may disappoint when results are released on 23 Jan 2020.
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STRATEGY – SINGAPORE 1H20 Outlook: Taking A Defensive Stance
While the FSSTI performed reasonably well in 2019, it paled in comparison to other developed markets in Asia and globally – even the protest-hit Hang Seng Index bettered the STI by a few percentage points. Heading into 2020, we advocate an approximate 60:40 defensive/large-cap strategy vs a growth/small-cap strategy. We forecast 4.3% EPS growth for our UOBKH universe of Singapore-listed stocks, and have a year-end target of 3,370 for the FSSTI (or 4.5% upside from current levels).
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CGS CIMB |
DBS VICKERS |
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AEM Holdings Ltd Tester capability strengthens AEM
■ AEM has announced the acquisition of Mu-TEST, adding low-cost tester capabilities to its fold. ■ We think the acquisition is a positive for AEM’s long-term developments and see limited earnings impact for the moment. ■ Maintain Add and TP of S$2.12. The next share price catalyst could be in Jan 20 when AEM provides FY20 revenue guidance.
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Singapore Developers Asset rejuvenation at work
• Developers to deliver higher returns and NAV uplift on recent M&A activities • Singapore residential market volumes may be boosted by the upgrader households. • Developers’ to actively pursue asset recycling • Prefer diversified plays like CAPL and CDL
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Check out our compilation of Target Prices
