Excerpts from CGS- CIMB report
|Sector Preference and Country Top Picks
With growth and recovery prospects being the key theme, Commodities and Telco are our new Overweight sectors.
Banks, Construction and Property are long-term winners for an economic recovery.
We also like Technology/Manufacturing on strong earnings outlook and the demand for IT-related infrastructure and life science equipment.
The recent successful listing and outperformance of Nanofilm Technologies (Not Rated) could draw more tech IPOs to Singapore, lifting the sector’s interest and valuations.
Capital Goods could see a good run from a recalibrated focus among the Temasek-linked companies as well as M&A hope.
On the flipside, we believe the recent run-up in Transport has priced in perfection and we do not think it is sensible given its +1 s.d. to mean valuations vis-à-vis weak earnings profile; downgrade to Neutral.
We make some changes to our country top picks — we remove SIA and CAPL after the surge in recent months.
We add YZJ, driven by heightened order momentum for containerships, and CIT, as a proxy to robust residential sales in Singapore and as a laggard play.
If liquidity is ample, we think small caps could be in vogue in 2021F and add two new names to our list
|— HRNet, on strong demand for flexible staffing by corporates and government agencies as well as growth in North Asia (China), and
-- ISDN, which could outperform on super profits (+166% yoy) in FY20F from the demand for industrial automation motors, especially in China.
Full report here.