Market Strategists. SG & US Equity Analysts. By Phillip Securities Research. 9 th Mar 15, 8.15am/11.15am Morning Call/Webinar

Transcription

1 9 th Mar 15, 8.15am/11.15am Morning Call/Webinar Market Strategists Kenneth Koh, Market & Equity Analyst Soh Lin Sin, Macro Equities Economist Osama Bakhteyar, Macro Equities Economist SG & US Equity Analysts Wong Yong Kai, US Equities Colin Tan, Telecoms Technology Caroline Tay, Real Estate Benjamin Ong, Finance Offshore Marine Richard Leow, Transport & Logistics Dehong Tan, REITs By Phillip Securities Research Mr. Chan Wai Chee, CEO Jaelyn Chin, Operations Exec 1

2 Disclaimer The information contained in this presentation has been obtained from public sources which Phillip Securities Pte Ltd ( PSPL ) has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the Research ) contained in this presentation are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in this presentation is subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. This presentation is intended for general circulation only and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should seek advice from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. 2

3 The big picture: equity markets Global equities (MSCI Global Index) Retail investors: remember to diversify Superior risk-adjusted returns

4 Past 2 years: developed > emerging MSCI World vs. MSCI Emerging Market US is very important in equity basket

5 Themes to outperformance Reforms + relatively strong economies = strong equity markets Simple themes has worked superbly Table: Two year dollarized returns (CAGR, %) Developed markets Index Currency Total returns Leaders USA (S&P 500) Japan (Nikkei 225) 28.5 (11.7) 13.5 Germany (DAX) 22.0 (7.9) 12.4 New Zealand 18.1 (5.0) 12.1 Switzerland Netherlands (AEX) 19.3 (7.9) 9.9 Spain (IBEX) 16.9 (7.9) 7.7 France (CAC) 15.6 (7.9) 6.5 UK (FTSE) Laggards Norway (OMX) 18.5 (14.0) 1.8 Canada (TSX) 9.5 (9.6) (1.0) Index (CAGR %) Currency (CAGR %) Emerging markets Total returns Leaders India (NIFTY) 23.4 (6.2) 15.7 China (CSI 300) 17.3 (0.3) 17.0 Laggards Russia (MICEX) (23.5) (29.9) (46.3) Brazil (Ibovespa) (4.6) (16.9) (20.8) Australia (ASX 200) 8.7 (13.0) (5.5) Indonesia (JCI) 10.2 (13.6) (4.9) Singapore (STI) 1.7 (4.7) (3.0) Thailand 1.5 (4.0) (2.6) Malaysia (KLCI) 6.0 (7.4) (1.9) Korea (KOSPI) (0.8) (0.7) (1.5) Hong Kong (HSI)

6 How to play the themes Markets Themes PSR Rating Unit Trust ETF Strong markets (past two years) US Relatively strong economy O/W Fidelity - America SPDR S&P500 (SGX) - S27 Legg Mason - Clearbridge US Growth Lyxor NASDAQ (SGX) - H1Q Legg Mason - Royce US Small Cap Opp. ishares Russell2000 (NYSE) - MVM Europe Recovery in credit/central banking Neutral Templeton - European DBX Tracker MSCI Europe - IH3 Schroder - European Eq. Alpha VGK Vanguard European Stock Index Schroder - ISF Euro Smaller Co Japan Regime change --> economic reforms O/W Aberdeen Japan Equity Fund DB Xtrackers MSCI Japan (SGX) LF2 Lion Global Japan Growth Fund ishares MSCI Japan (NYSE) EWJ Niko AM Shenton Japan Fund WisdomTree Japan Hedged Equity - DXJ China Relatively strong economy O/W First State Regional China DB Xtrackers MSCI China TRN Index (SGX) LG9 Fidelity Greater China DB Xtrackers CSI 300 ETF (HK) 3188.HK Schroeder Greater China CSOP FTSE China A50 ETF (HK) 2822.HK India Regime change --> economic reforms O/W Aberdeen India Opp SGD MSCI India (SGX) I98 Fidleity India Focus A SGD DBX India (SGX) LG8 Lion Global India Acc SGD Weak markets (past two years) Singapore Mixed economics/$/fundamentals Neutral DWS Singapore Small/Mid Cap SPDR STI ETF (SGX) ES3 Nikko AM Singapore Dividend Eq Nikko AM STI ETF (SGX) G3B Amundi Singapore Dividend Growth Indonesia Regime change --> economic reforms O/W Aberdeen Indonesia Equity Lyxor Indonesia 10US$x (SGX) P2Q Fidleity Indonesia A USD DB XT MS Indo 10US$ (SGX) KJ7 Malaysia Lower oil --> economic contraints U/W Lion Global Malaysia Fund DB Xtrackers MSCI Malaysia (SGX) LG6 Aberdeen Malaysia Equity Fund XE Shares Malaysia (HK) 3029.HK

7 The next themes Themes Consumer-driven economies: positive revenue-side or negative cost-side will win out? Markets/ industries US Europe Japan Current PSR Rating O/W Neutral O/W Turn in the commodity cycle: which, when, where, how much, why? Australia - Brazil - Russia - Canada - New regimes: reform or rhetoric? Japan O/W India Thailand Indonesia O/W Neutral O/W Oil: what are the Saudi's trying to do? India O/W Japan O/W US O/W Malaysia U/W Indonesia O/W

8 Investment idea of the week Buffet-like stocks: Under-appreciated industry Good growth outlook Superior return on equity Free cash flow spinning Moats to competition Sheng Siong (Buy) 800 Super (Buy) Not as cheap as we d like, but still attractively valued * - Warren Buffett definitely didn t say this, but he might if he was Singaporean

9 Sheng Siong Group BUY Closing Px: $0.745 Target Px: $0.88 Market share gainer in highly competitive industry Superior margins vs local peers; above regional average 13.4% more store space by FY17F 9

10 Sheng Siong Group BUY Closing Px: $0.745 Target Px: $ % of modern grocery sales in % more store space by FY17F 3.7% revenue CAGR in FY15/16F +13.4% 3.7% CAGR 10

11 Sheng Siong Group BUY Closing Px: $0.745 Target Px: $0.88 Superior EBIT margin vs local peers Above average margins vs regional players 11

12 Sheng Siong Group BUY Closing Px: $0.745 Target Px: $0.88 Gross margin to hit 25% in FY16F Fresh food to be 45% of sales in FY16F Bulk purchase to hit 80% in FY19F 12

13 Sheng Siong Group BUY Closing Px: $0.745 Target Px: $0.88 Higher staff and rental cost expected EBIT margin expansion supported by widening gross margin 13

14 Sheng Siong Group BUY Closing Px: $0.745 Target Px: $

15 Sheng Siong Group BUY Closing Px: $0.745 Target Px: $0.88 Key Risks: Keen competition from NTUC and DFI Store closures could soften revenue growth Costlier labour could weigh on margins 15

16 Recent research products Ratings changes: OSIM (Buy Accumulate). Stock has risen toward our analyst s target price. Kim Heng (Buy Accumulate Suspend coverage). Not the right time to be buying oil stocks. Company visits: CSE Global, Japfa, ST Engineering, Golden Agri Resources, Venture Corp, Thai Bev Results notes: Amara Holdings (Buy), Kim Heng Offshore (Acculate, see above), Sinarmas (Buy), Ho Bee Land (Accumulate), Raffles Medical (Accumulate), and the Plantation sector. Outside SG: Indian budget, technical analysis update on gold, and Iconix Brands

17 Week ahead EU USA SG SG Earnings 9-Mar 10-Mar 11-Mar 12-Mar 13-Mar Monday Tuesday Wed Thur Fri King Wan Corp (conf) none Stamford Tyres (est) TTJ Hldg (est) Vibrant (est) Lifebrandz (est) Cleveland Fed speaks FR biz sentiment Sunright (est) Ipco (est) Vicplas (est) +7 companies Retail sales NODX Job openings EIA report Retail sales PPI EU ind. production EU retail sales CPI (some) Treasury budget Jobless claims CPI (some) Biz inventories CPI (some) Consumer sentiment Slow earnings Important ones: US jobs & consumer Japanese GDP & PPI Phillip Conference on Tuesday Japan Current account* GDP* Money supply* PPI* Industrial production India Exports/imports Industrial production

18 Disclaimer The information contained in this presentation has been obtained from public sources which Phillip Securities Pte Ltd ( PSPL ) has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the Research ) contained in this presentation are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in this presentation is subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. This presentation is intended for general circulation only and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should seek advice from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. 18

19 Ask Questions! Market Strategists Kenneth Koh, Market & Equity Analyst Soh Lin Sin, Macro Equities Economist Osama Bakhteyar, Macro Equities Economist SG & US Equity Analysts Wong Yong Kai, US Equities Colin Tan, Telecoms Technology Caroline Tay, Real Estate Benjamin Ong, Finance Offshore Marine Richard Leow, Transport & Logistics Dehong Tan, REITs By Phillip Securities Research Mr. Chan Wai Chee, CEO Jaelyn Chin, Operations Exec 19