UOB is recommending investors seek shelter in dividend-yielding stocks such as Singtel, ST Engineering, SPH, SATS, REITs and plantation companies on the back of continuing market volatility in the aftermath of Brexit, according to a report issued on Monday.
Within the REIT space, UOB recommends investors seek refuge in defensive REITs that have no exposure to Europe. These include Parkway Life REIT, Frasers CT and Mapletree Industrial Trust, with target prices of $2.38, $2.15 and $1.61 respectively.
Even for REITs with significant exposure to the UK and EU such as City Developments, Frasers Hospitality Trust and Ascott Residence Trust, the impact on balance sheet is minimal for most companies due to their natural hedge. The research house forecasts a 0.5-2.9% negative impact on earnings if the pound depreciates by 10%.
In transportation, ComfortDelGro is expected to suffer minimal impact to its earnings due to the resilient nature of the UK bus segment, which accounts for 88-90% of the company’s UK revenue. For Singapore Airlines, euro-dominated euro- denominated revenue is likely to be less than 4% of total revenue. In the near term, yields could fall, but the medium-term impact would be negligible, says the report.
UOB is maintaining an “overweight” rating on the plantations sector and recommends Bumitama Agri for its best earnings growth among peers. Target price is $1.30. The research house has assessed that Brexit is unlikely to have an impact on earnings for plantation companies. Wilmar, with its 6.8% exposure to Europe, is likely to only suffer minimal impact to its earnings. The strengthening of the US dollar on the other hand, will be positive for the sector as CPO trades largely in US dollars.
The research house also recommends blue chips such as Singtel with a target price of $4.38, ST Engineering with a target price of $3.50, SPH with a target price of $3.90 and SATS with a target price of $4.20.
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Within the REIT space, UOB recommends investors seek refuge in defensive REITs that have no exposure to Europe. These include Parkway Life REIT, Frasers CT and Mapletree Industrial Trust, with target prices of $2.38, $2.15 and $1.61 respectively.
Even for REITs with significant exposure to the UK and EU such as City Developments, Frasers Hospitality Trust and Ascott Residence Trust, the impact on balance sheet is minimal for most companies due to their natural hedge. The research house forecasts a 0.5-2.9% negative impact on earnings if the pound depreciates by 10%.
In transportation, ComfortDelGro is expected to suffer minimal impact to its earnings due to the resilient nature of the UK bus segment, which accounts for 88-90% of the company’s UK revenue. For Singapore Airlines, euro-dominated euro- denominated revenue is likely to be less than 4% of total revenue. In the near term, yields could fall, but the medium-term impact would be negligible, says the report.
UOB is maintaining an “overweight” rating on the plantations sector and recommends Bumitama Agri for its best earnings growth among peers. Target price is $1.30. The research house has assessed that Brexit is unlikely to have an impact on earnings for plantation companies. Wilmar, with its 6.8% exposure to Europe, is likely to only suffer minimal impact to its earnings. The strengthening of the US dollar on the other hand, will be positive for the sector as CPO trades largely in US dollars.
The research house also recommends blue chips such as Singtel with a target price of $4.38, ST Engineering with a target price of $3.50, SPH with a target price of $3.90 and SATS with a target price of $4.20.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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