Top 5 Singapore stocks to watch in August 2021
Analysts say these five Singapore blue-chip stocks are among the ones to watch in the month ahead. Here are their insights.
These five Singapore-listed equities are among analysts' most recommended to trade for the month of August 2021, based on their latest ratings, price targets and research.
1. Keppel Corporation Ltd (SGX: BN4)
2. DBS Group Holdings(SGX: D05)
Keppel Corporation (SGX: BN4)
Latest share price (03 August 2021): S$5.43
12-month target price (high end): S$6.90
Estimated upside from latest price: 27.1%
CIMB analysts lifted their price target on Keppel Corp shares to S$6.90 from S$6.40 and reiterated an ‘add’ rating on 30 July 2021.
They wrote that they were ‘positively surprised’ by the group’s ‘generous’ dividend amount of S$0.12, the highest since 2015.
The analysts envisioned a total dividend payout of S$0.25 for FY2021, which would translate into 4.5% yield.
UOB also kept a ‘buy’ call on the stock while raising target price slightly to S$6.48 (from S$6.37).
The analysts said Keppel’s 1H 2021 was ‘decent’, as it reported a ‘reversal of fortunes’ for the quarter with a better-than-expected net profit of S$300 million. This was against a loss of S$537 million in the same period a year ago.
Keppel Corporation also announced on Monday (02 August) that it would acquire Singapore Press Holdings, excluding the latter’s media business, for a proposed consideration amount of S$3.4 billion.
Following the announcement, Quiddity Advisors analyst Travis Lundy, said that the offer gives investors ‘a slightly higher yield than they would have been expecting out of SPH (assuming they reinvest the cash into a yield product)’.
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DBS Group (SGX: D05)
Latest share price (03 August 2021): S$29.94
12-month target price (high end): S$33.71
Estimated upside from latest price: 12.6%
Maybank analyst Thilan Wickramasinghe maintained a ‘buy’ rating on Singapore’s most valuable bank on 26 July, alongside a target price of S$33.71.
He cited how US banks are ‘aggressively reversing 2020 provisions as economic growth takes off’, adding that Singapore banks can do the same thanks to strengthening growth and good vaccination progress.
‘Fresh infections regionally makes timing hard to predict, but just matching the average US pace of write-backs could add 15-18% to 2021E earnings,’ he wrote.
Meanwhile, UOB’s Jonathan Koh had the most bullish target price of the latest analyst reports at S$35.60 (up from S$35.45 previously) and a ‘buy’ recommendation.
Koh expects DBS Group to post a net profit of S$1.54 billion for the second quarter of 2021 - representing a 23% year-on-year increase, following ‘exceptionally strong’ first quarter results.
The Monetary Authority of Singapore’s recent lifting of dividend caps on Singapore financial institutions also ‘opens the gateway to more shareholder return, just before the banks are set to release their results’, according to IG market strategist Yeap Jun Rong.
Oversea-Chinese Banking Corporation (SGX: O39)
Latest share price (03 August 2021): S$12.11
12-month target price (high end): S$15.52
Estimated upside from latest price: 28.2%
Maybank’s Wickramasinghe believes that improved net interest margins, stronger loan growth, rising non-interest income and falling provisions should set the banking sector for faster earnings momentum in 2Q of 2021.
He prefers OCBC, as well as the aforementioned DBS Group, ‘for the strongest coupling to these drivers, while also offering the highest probability for earlier provision write-backs’.
He has a ‘buy’ rating and a fair value estimate of S$14.17 on the stock, which implies a 17% upside from its most recent price of S$12.11 on 03 August 2021.
UOB’s Koh was more upbeat, lifting his target price to S$15.52 from S$15.50 and keeping his rating at ‘buy’.
He said OCBC’s 1Q 2021 was ‘exceptionally strong’, and has forecasted for second quarter net profit to burgeon 64% year-on-year to S$1.2 billion.
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CapitaLand Ltd (SGX: C31)
Latest share price (03 August 2021): S$4.03
12-month target price (high end): S$4.40
Estimated upside from latest price: 9.2%
RHB analyst Vijay Natarajan lifted his firm’s target price to S$4.40 from S$4.25 previously, while keeping a ‘buy’ rating on CapitaLand Ltd.
He said that RHB is now more positive about the property developer’s proposed restructuring of its businesses into two separate entities, thanks to a new scheme document released on 17 July that outlined details of the exercise.
‘(CapitaLand’s) independent financial advisor Evercore has deemed the deal “fair and reasonable”, and our recommendation is also to vote in favour of the transaction,’ Natarajan added in a note dated 21 July.
CIMB analysts, who have an ‘add’ call and target price of S$4.04 on the group’s shares, wrote that the restructuring exercise should enable the new to-be listed CapitaLand Investment (CLI) to ‘accelerate growth’.
As part of the restructuring, CapitaLand’s real estate development arm will be parked under existing controlling shareholder CLA Real Estate Holdings as a private business, while its investment management and lodging business will be consolidated into CLI.
Singapore Airlines (SGX: C6L)
Latest share price (03 August 2021): S$4.98
12-month target price (high end): S$5.54
Estimated upside from latest price: 11.2%
CIMB analyst Raymond Yap said Singapore Airlines' 1Q core net loss of S$430 million was ‘in-line at 26%’ of his firm’s full-year loss estimate of S$1.66 billion.
This was also ‘sharply narrower than the S$1 billion loss for 1QFY21, as cumulative ineffective fuel hedging losses of S$462 million were transferred from balance sheet equity into the P&L (profit and loss) during 1QFY21’.
Despite this achievement, SIA’s core net loss for the quarter was ‘wider than the immediately preceding 4QFY21’s core net loss of S$321 million, most likely due to higher interest expense, and/or lower deferred tax credits’, Yap added.
He maintained an ‘add’ call on the shares, on the prediction that international travel will resume gradually from late 2021, before becoming more meaningful by the middle of next year.
He also reduced his target price slightly to S$5.54, which equates to a 11.2% upside potential from its most recent price of S$4.98 on 03 August 2021.
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