Friday, December 20, 2013

Singapore Consumer Stock picks - Selective stance for 2014 (DBSV)

Stock picks - Selective stance for 2014
Adopt bottom-up strategy. We have selected stocks with: 1) Stronger fundamentals and better resilience to softening revenue and margin compression; 2) Oversold companies at attractive valuations; and 3) Stable earnings and dividend payout. On the back of our muted outlook for the sector, we advocate a selective stance in our picks, preferring to look to companies that continue to deliver growth on the back of a reasonable valuation (Osim), oversold counters with possible earnings recovery and growth in FY14F (Courts, Del Monte), and stable growth profile with yield (Sheng Siong).


a) Growth vs Valuation
Avoid ASEAN exposed stocks. Singapore consumer stocks are generally exposed to ASEAN markets and offer growth opportunities within these emerging markets. Since 2H13, domestic demand in ASEAN has slowed down, led by weakening currencies and domestic policies.

OSIM (BUY, Share price: S$2.28, TP: S$2.60). Osim has shown continued growth on the back of reasonable valuations. We like the stock for its continued growth profile and its substantial exposure outside of ASEAN. Osim derives c.55% of its revenue from North Asia markets. The company also consistently innovates and uses new products to drive regional performance.

Going forward, management is lining up newer versions of existing models to be launched next year. This will ensure sustainable revenue growth from these new chair launches this
year and the next. Gross margins are attractively high at close to 70%, which we believe will be sustainable going forward. Valuations are also undemanding at c.14x FY14F earnings.

b) Oversold counters
We pick oversold counters that are trading at attractive valuations.
Courts Asia (BUY, Share price: S$0.59, TP: S$0.77). We advocate a buy on its attractive valuations, even though Courts Asia has disappointed in its recent earnings announcement. At current levels, we believe the stock is oversold. The company’s valuation is now at -1SD of its mean forward earnings based on our FY15F earnings projection. This works out to a compelling PEG of 0.5x.

We believe downside is limited from these levels, as our earnings estimate is conservative and at the low end of consensus. Courts recently tightened its credit to customers, to improve its credit book. Based on our estimate, management should relax its credit before the start of FY15F. We hence expect a more relaxed credit from the start of FY15F, which could potentially drive credit sales, gross margins and earnings growth.

Del Monte Pacific (BUY, Share price: S$0.59, TP S$0.82). We recently upgraded Del Monte Pacific as we believe the recent >30% share price retreat has more than priced in the uncertainty of its proposed US$1.675bn acquisition of US-based Del Monte Foods’ Consumer Food Business. With the majority of its loan funding in place, we believe more clarity on management’s plans and strategy will progressively be shared in 2014, following the completion of the acquisition, expected by Feb 2014. While earnings in FY14F will be impacted by a one-off acquisitionrelated transaction cost, we estimate that at its current price, the counter is trading at c.9x FY15F earnings of the combined entity.

c) Consumer yield plays
Sheng Siong (BUY, Share price: S$0.58, TP S$0.80). We recommend Sheng Siong as a yield play in our Singapore consumer stock pick. As the third largest supermarket operator in Singapore, the company should be able to deliver consistent earnings, and pays 90% of earnings as dividends. Dividend yield is c.5%, which lends support to the share price. Due to its stable earnings, consistent dividend payout and attractive yield, we believe the stock will add a defensive dimension to investment portfolios.


Source/Extract/Excerpts/来源/转贴/摘录: DBSV-Research,
Publish date: 18/12/13

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Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)
“错过时机”胜于“搞错对象”:不会全军覆没!”
做自己熟悉的事,等到发现大好机会才投钱下去

乔治·索罗斯(George Soros)

“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

李驰(中国巴菲特)
高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
冷眼(冯时能)投资概念
“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
曹仁超-香港股神/港股明灯
1.有智慧,不如趁势
2.止损不止盈
成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
曾淵滄-散户明灯
每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
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