Top five Singapore stocks to buy in February 2020

Below are the top five Singapore-listed equities that investors should take note of for the month of February, based on recommendations provided by Singapore bank DBS’ equity research team.

Read also: Top 5 Singapore stocks to buy in March 2020

1. Singtel

Singapore’s largest telecommunications provider Singapore Telecommunications Limited (Singtel) has received a ‘buy’ rating and a 12-month share price target of S$3.80 per share. DBS analysts have also forecasted a 13.1% upside for the stock.

Share price of Singtel, which has a market capitalisation of S$54.38 billion, has fallen over 2% since the start of the year. It is currently trading at S$3.33 per share.

This bullish outlook was provided in spite of the fact that the company’s Thai subsidiary Advanced Info Service (AIS) was recently ordered by an arbitrational tribunal to pay S$1.37 billion to rival TOT Public company, after the latter filed a lawsuit claiming for loss of benefit stemming from unlawful contract amendments in a mobile service agreement between both parties dating back to 2001.

Regarding the outcome, AIS said: "The company disagrees with such award for the reason that it was unlawful. Therefore, we are proceeding to submit the case to the Central Administrative Court for the revocation of the Arbitral Tribunal's award within 90 days after receiving the award.

As the dispute is not final and the company will take further legal action, such award does not impact the company's financial status, liquidity nor the ability to service debts."

Look out for: Singtel’s Q3 FY2020 earnings, to be announced on 13 February.

2. Wilmar International

Food processing giant Wilmar International Limited, whose business activities include oil palm cultivation, oilseed crushing, sugar milling and refining, and food manufacturing, continues to be one of Singapore’s favourite blue-chip stocks since its listing debut in August 2006.

The conglomerate, which employs 90,000 people globally, is consistently among the top ten most traded stocks by volume of securities traded. Currently, it has a three-month average trading volume of 109.13 million.

Researchers at DBS have given Wilmar’s stock a ‘buy’ rating, a 12-month price target of S$4.60 per share, and an upside of 15.3%. The price recommendation represents an 18.2% increase from the current share price of S$3.89, as of 31 January.

Wilmar shares are down 7.4% since the start of the year.

Look out for: Updates regarding the Wuhan coronavirus and its impact on Wilmar’s China operations. Although the company has nine plants in two locations across Wuhan, it has stated that there is no significant impact so far on the operations there.

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3. Keppel Corporation

Singapore offshore, marine and property company Keppel Corporation Limited did not have such a great 2019 in terms of net profits.

Last week, Keppel Corp reported net profits of S$707 million in FY2019, which is a decline of 25.5% from FY2018.

However, based on the company’s guidance for this year, it looks like better days are ahead. The comeback trail has been mapped, largely because of a ‘diversification’ strategy that has helped the company – particularly the offshore and marine division – to secure a ‘wider portfolio of products’.

On that note, DBS analysts have raised their price target for Keppel Corp stocks to US$7.50 per share, alongside a prospective upside of 11.3%.

Look out for: The Keppel Asia Infrastructure Fund, a new closed-end infrastructure private equity fund that was launched on 29 January. It has already raised an initial US$360 million in capital from a sovereign wealth fund and an endowment fund.

Read also: Top 9 billion-dollar SGX stocks by fundamentals

4. CapitaLand Retail China Trust

Researchers have maintained a ‘buy’ rating for stocks of CapitaLand Retail China Trust (CRCT), the China shopping mall real estate investment trust (REIT) subsidiary of Singapore commercial property developer CapitaLand Limited.

Analysts also gave a 52-week share price target of S$1.80 (representing a 16.13% increase from the most recent traded price of S$1.55) and an upside prediction of 16.9%. Do note though that the last time CRCT’s share price rose above S$1.70 was in 2015.

DBS stated that its price estimates are on the higher end as it believes the firm’s so-called ‘active asset reconstitution strategy’ – which involves the strategic acquisition, enhancement and divestment of assets in core Chinese city clusters, will continue to realise value for investors.

Look out for: Updates on CRCT’s portfolio of 13 malls across China, as the Wuhan coronavirus continues to pick up steam. CapitaMall Minzhongleyuan in Wuhan was shut on 29 January as a precautionary measure. The other malls are presently operating on shorter hours.

5. EC World Reit

E-commerce and supply chain-focused REIT, EC World Real Estate Investment Trust, owns eight income-producing commercial properties across China, including one in Wuhan.

Despite the 2019-nCoV (novel coronavirus) being escalated to ‘crisis’ status by the World Health Organisation, DBS analysts have gone ahead to reiterate a ‘buy’ rating on the company’s equity. A price target of S$0.86 per share alongside an upside potential of 17.8% was also indicated.

EC World REIT shares are currently trading at S$0.72 per share.

The company on Wednesday 29 January said that there has been no significant impact on tenants’ operations, due to the nature of its business, which is in supply chain and e-commerce. Furthermore, its Wuhan assets account for less than 2% of its net property income.

Look out for: Company bourse filings in the coming weeks, which might contain updates on the situation in China as well as any financial impact.

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