Top 5 Singapore stocks to watch in May 2023

Top 5 Singapore shares to watch in May 2023

1. DBS Group Holdings Ltd
2. City Developments Limited (CDL)
3. United Overseas Bank (UOB)
4. CapitaLand Investment Limited (CLI)
5. Oversea-Chinese Banking Corporation (OCBC)

DBS Group

Shares of Singapore’s most valuable company have gathered a consensus rating of ‘outperform’, alongside a price target of S$38.48 on the stock.

The price target equates to a 19.4% upside potential from DBS’ last traded price of S$32.24 on 3 May 2023.

OCBC and Maybank’s equity research teams rated DBS Group shares a ‘buy’ on 2 May 2023, following the bank’s first quarter (1Q) earnings.

DBS Group’s net profit for 1Q 2023 rose 43% from a year ago to a ‘record’ S$2.57 billion, surpassing industry estimates of S$2.01 billion. Return on equity increased to 18.6%, also a new high, said the group.

IG analyst Yeap Jun Rong said 1Q has produced a ‘resilient set of results, with net interest income continuing to do the heavy-lifting for record earnings this quarter’.

‘Loan demand has also held up well, potentially supported by some recovery in housing loans but of course, the latest cooling measures from the government will surely be one to watch over the coming months, in terms of how much it may have a limiting impact on housing loans,’ he added.

City Developments (SGX: C09)

CDL has seen its shares drop by 15% since the start of the year.

Despite the real estate group's bearishness, analysts still expect the stock to ‘outperform’ in the next 12 months, with a potential for its share price to rally 24.9% during this time frame.

The latest rating and share price target for CDL came from UOB’s equity research team. The analysts rated the stock a ‘buy’ alongside a new price target of S$8, down from S$9.70 previously.

UOB’s lower price target came on the back of the Singapore government’s latest property cooling measures, which included increases in Additional Buyer’s Stamp Duty (ABSD) across most residential property categories.

The increases in ABSD applied to foreigners, entities, and trustees. Singaporean citizens and permanent residents remain unaffected.

UOB analysts cautioned that this may be an overhang on CDL’s share price in the ‘near term’. However, they also noted that ‘recovery was seen in a matter of weeks’ during previous cooling measures.

UOB (SGX: U11)

The UOB share price has fallen over 4% since the release of its latest quarterly results.

The group’s core net profit rose 74% year-on-year to a ‘record’ S$1.6 billion for 1Q 2023. This came on the back of growth across wholesale, global markets, and retail businesses.

Singapore's third largest bank posted a record S$1.6 billion in core net profit for the first quarter of 2023 (1Q23), up 74% compared with the same period last year, delivering resilient performance with continued income growth.

This exceeded analysts’ profit prediction of S$1.55 billion, according to Refinitiv estimates.

‘The banking sector is all about confidence and confidence in our local banks has been well-anchored,’ said IG’s Yeap.

‘Spillover effects from the banking fallout in the US has also thus far failed to have much of a significant impact on our local banks as well,’ he added.

Looking ahead, he said much of the focus would be on the banks' outlook, and ‘whether the current resilience can be sustained over coming quarters’.

‘From the results, the largest tailwind from the interest rate upcycle could likely be behind us, as expectations are for the Fed to head towards an impending rate pause. Downside risks to economic conditions remain on the table as well, so that may put the recovery in fee income in check,’ said Yeap.

CapitaLand Investment (SGX: 9CI)

The latest analyst sentiments published by SGX StockFacts show a consensus rating of ‘outperform’ on CapitaLand Investment (CLI) shares, alongside a share price target of S$4.22.

The price target equates to a 13.78% upside potential from the stock's last traded price of S$3.71.

UOB analysts named the stock as their top pick among Singapore property developers, ‘given that the company does not have any residential exposure in Singapore’.

They maintained a ‘buy’ on CLI with a target price of S$4.28 in their latest investor note.

‘We believe that CLI’s current price-to-book (P/B) valuation is inexpensive at 1.1 times for 2023 versus its 2022 peak P/B of 1.4 times,’ they wrote.

‘In our view, CLI will be in a much stronger shape in 2023 as we expect China’s recovery path to be sustained given a post-Covid-19 normalisation of the economy,’ the analysts added.

OCBC (SGX: O39)

OCBC will report its latest results on Wednesday (10 May 2023).

Analysts polled by Refinitiv have predicted OCBC’s net profit to come in around S$1.74 billion for 1Q 2023, up 28% from a year ago.

UOB analysts, who rated OCBC shares a ‘buy’ with a price target of S$16.80, have forecasted a net profit of S$1.71 billion for the quarter.

The analysts expect OCBC’s loan growth to be ‘muted’ at 1.4% year-on-year with corporate customers ‘cautious on business expansion’.

Across the board, OCBC shares have a consensus rating of ‘neutral’ and an average price target of S$14.02, based on the latest SGX StockFacts data on 3 May 2023.

The price target equates to a 11.8% upside potential from its last traded price of S$12.55.