Are Thai Bev, KeppelCorp, Perennial, SIA Engin & CDLH Trust undervalue?

According to DBS Treasures, they are the top 5 most undervalued stocks in my watchlist.

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From time to time, I would pay a visit to the “Asian Insights” section of the DBS Treasures to get a glimpse of their insights and analysis on the companies on my watchlist.

Although I don’t subscribe to their views 100%, it is still a valuable source of information. I am sure the DBS researchers put in more brain power, more time and read more reports than I do before coming forward with their views. It is a useful first step to begin forming my own views of the company and to refresh my views if DBS Treasures alter their views significantly.

By the way, this is not an advertisement for DBS Treasures but I like to acknowledge the public information that DBS Treasures provided for this blog. On their “Asian Insights”, we can find information about the companies that DBS have researched on and if you are a DBS account holder (I think I can safely assume that 90% of Singaporeans are), you can even have a softcopy of their deeper insight and analysis of those companies. And all these are free … whether they are up to date is a separate issue J… nothing comes free in this world, right?

Enough talk about DBS Treasures, let’s see the numbers with reference to my watchlist.

As I started, the top 5 most undervalue stocks in my watchlist according to them are:

  1. Thai Beverage (current trading price of $0.62 versus their target price of $0.94, 52% upside)
  2. Keppel Corp ($6.53 versus $9.00, 38% upside)
  3. Perennial Real Estate ($0.79 versus $1.05, 33% upside)
  4. SIA Engineering ($2.95 versus $3.92, 33% upside too)
  5. CDL Hospitality Trust ($1.56 versus $1.95, 25% upside)
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time to decide concept clock

Should we jump in to buy them now?

Well, this is a question that only we can answer ourselves and in my view, it depends on the following:

First and foremost, do you agree with the target price by DBS Treasures?

Even if you do, you may want to ask …

  1. How exposed are you to that particular company?
    • I am already 3.3% exposed to Thai Bev, so I will think twice before adding significantly more
  2. How exposed are you to the industry of those companies?
    • 30% of my portfolio is made up of Reits which is my desired weightage, if I want to add more CDL Hospitality Trust significantly, I probably need to drop other Reits to maintain the same weightage
  3. Is it a dividend paying company? Is its dividend yield sufficient for you?
    • This is important esp if you are an income investment like me.
    • For example, Perennial’s dividend yield is 1.3%, which is a bit low for me, so I really have to believe in the price target and aim for capital gain
  4. Do you have sufficient cash to invest on top of your cash you set aside for emergency?
    • This is always a key question to ask before you commit. No investment is worth sleepless nights.

The other insight that I normally glimpse is the sentiment of DBS research house towards the market outlook.

I judged it from the changes in the target prices.

For this round, I can sense a lot of pessimism in the target prices compared to a few months ago. Out of the 53 companies in my watchlist that are researched by DBS, 27 record a lower target price compared to a few months ago, 15 remain unchanged while 11 have a higher target price.

I think this reflects the general depressed sentiment in the market – with the trade war among the major countries, the constant Middle East tension, the slowing down of the Chinese market, rising oil prices and the rising interest rate … who won’t become more pessimistic.

woman in black top and blue shorts on stone under blue sky
Photo by Tembela Bohle on Pexels.com

Among the 53 companies, the following 5 have the worst downward revision in target price

  1. Starhub (target price Now $1.42 from $2.05, $1.42 is even lower that current trading price)
  2. HPH Trust (Now $0.28 from $0.38)
  3. UOL (Now $7.82 from $10.23)
  4. OCBC (Now $12.40 from $15.30)
  5. M1 (Now $1.46 from $1.76)

The reasons are well known – the impending new telecoms entrant into Singapore in Q4, the US-China trade war, the new property cooling measures etc.

Well, not everything is so gloom and doom, there are also a few bright spots that have earned an upward revision in their target prices that are worth mentioning. They are:

  1. Comfort Delgro (Now $2.59 from $2.12)
  2. MapleTree Log (Now $1.53 from $1.45)
  3. ST Engineering (Now $4.10 from $3.90)
  4. Sheng Siong (Now $1.26 from $1.20)
  5. CapitaMall (Now $2.30 from $2.19)

The share price of all except ST Engineering have already moved up quite a fair bit recently. Well, it actually makes ST Engineering looks like an exceptional bargain, right? Keen?

man lying down on mat while lifting woman
Photo by theformfitness on Pexels.com

Before I sign off,

I just like to say that no one knows what will happen tomorrow, not to say whether the share prices will go up, down the next day, next week or a few months later.

DBS researchers are no different. So is it useful to read what they have written? Maybe yes maybe no, but I sure you will learn more about the company that you want to invest by doing more reading and taking in different perspectives. So, I still find this a valuable exercise for me. But ultimately, it is your money and you will have the final decision. So do your own research and be decisive when the time comes to invest or divest.

Good luck folks and have a great investment week ahead.

Regards,

Warriortan

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2 thoughts on “Are Thai Bev, KeppelCorp, Perennial, SIA Engin & CDLH Trust undervalue?

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