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UOB KAYHIAN |
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Singapore Strategy #4 help package: more cushioning
■ We were positively surprised by the government’s generous new S$33bn help package. JSS (+S$2.9bn) to be extended by 1 month (10 months total). ■ JSS up from 25% to 75% for aerospace and construction, 50% for retail and offshore & marine. Material incremental effects for STE, SIE, KEP and SMM. ■ A new bill in Jun 20 will help qualifying SMEs — 4 months of rental relief equally shared by landlords and government. Slight negative for retail REITS.
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Positioning For Recovery
We believe global equities have largely bottomed out, thanks to governments’ and central banks’ swift move to release monetary and fiscal stimulus packages. The Singapore government has done a good job in attempting to protect individuals’ and corporates’ balance sheets. Exiting the “circuit breaker”, we advocate exposure to financially robust companies that are leveraged to the general economic recovery and/or pay a sustainable dividend. Our year-end target for the STI is 2,760.
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UOB KAYHIAN |
RHB |
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Retail REITs – Singapore Fortitude Budget Provides Backstop
Visibility has improved with the roadmap for re-opening post-Circuit Breaker already announced. In addition, the Fortitude Budget provides new cash grant equivalent to about 0.8 month’s rent for SME tenants, which would help affected retailers tide over this difficult COVID-19 pandemic period. Upgrade CMT (Target: S$2.60) and FCT (Target: S$2.85) from HOLD to BUY. Maintain BUY on MCT (Target: S$2.38). Upgrade Retail REITs to OVERWEIGHT.
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Singapore Medical (SMG SP) Fast Forward To 2021
Still NEUTRAL with new P/E-derived SGD0.25 TP from SGD0.35, 9% upside. Travel restrictions and closure of the aesthetic business due to the Government’s Circuit Breaker has impacted Singapore Medical Group. As the country moves towards the end of this period, it will undergo a 3-phased easing process that could last months, suggesting a slower economic recovery from COVID-19. We lower our FY20F-22F earnings by 47%, 23%, and 5%, and adjust net margin expectations by -4.1, -1.4, and 0.3ppts.
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Check out our compilation of Target Prices
