In­dus­tri­als | Neu­tral

The Straits Times - - BUSINESS -

Bro­ker: OCBC In­vest­ment Re­search, Sept 13

Among the lo­cal con­glom­er­ates in our yard space, all stocks (Kep­pel Corp, Sem­b­corp In­dus­tries, Sem­b­corp Ma­rine, Yangz­i­jiang Ship­build­ing (YZJ) are down year to date, with more volatil­ity seen for YZJ and Sem­b­corp Ma­rine.

YZJ is down 22 per cent year to date, but if we look at the stock’s per­for­mance since mid-July (close to trough for the mar­ket and prior to most com­pa­nies’ third-quar­ter re­sults re­lease), it has ap­pre­ci­ated by 34 per cent, out­per­form­ing most lo­cal stocks by a wide mar­gin.

An­other out­per­former since mid-July is Sem­b­corp In­dus­tries, which is up 14 per cent, aided by a turn­around in In­dia op­er­a­tions amid a tight­en­ing power mar­ket.

Among trans­port-re­lated names (Com­fortDelGro, Sin­ga­pore Air­lines (SIA), Sats, SIA Engi­neer­ing), all are down year to date ex­cept for Com­fortDelgro, which is up 14 per cent, aided by a rally in April-May.

In­vestors look­ing for good div­i­dend yields and some growth prospects over the long term could con­sider Com­fortDelGro, which of­fers a 4.6 per cent yield at cur­rent lev­els, and Sats, which has been in­creas­ing its div­i­dends by one cent per year since FY13. Based on last year’s 18 cents per share, there is a 3.6 per cent yield at cur­rent lev­els.

SIA and SIA Engi­neer­ing also of­fer div­i­dend yields of 4.2 per cent and 4.4 per cent based on last year’s div­i­dend fig­ures, but we note that there is rel­a­tively less con­sis­tency com­pared with Com­fortDelgro and Sats, which have been in­creas­ing their div­i­dends over the years.

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