In a flash note on Friday, CIMB analyst Lim Siew Khee says the growth was led by “a sharp acceleration in manufacturing growth.”
“This is the strongest annual growth since 1Q 2014’s growth of 4.9% y-o-y,” Lim notes.
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On a quarterly basis, Lim says advance 3Q GDP growth of 6.3% q-o-q beat expectations, with growth across the board except for the private construction sector. However, the analyst opines that the sector will pick up soon.
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“We believe the heightened government land sale and en bloc redevelopment craze year-to-date will spur the private construction sector in 2018,” Lim says.
As such, CIMB is adding Venture Corporation and Keppel Corporation to its top picks, on the back of the former’s visible volume growth into 1H18, and the latter’s potential to ride the upcycle in Singapore’s property market.
CIMB has an “add” call on Venture Corp, with a target price of $20.87.
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“We expect stronger 2H17 earnings to be driven by test & measurement, medical and networking customers,” Lim says, adding that “there is a potential for higher dividend from the sale of Fischer Tech.”
Meanwhile, the research house also has an “add” recommendation on Keppel Corp, with a target price of $8.58.
“We think the negative revision cycle is over and there could be continued improvement in sentiment, driven by Singapore property and O&M,” Lim says.
As at 3.40pm, shares in Venture Corp are trading 4 cents lower at $18.39, and shares in Keppel Corp are trading 27 cents higher at $7.06.
