“We like MLT’s exposure to the China reopening story as its China and Hong Kong portfolio constituted 21% and 23% of its portfolio valuation respectively as at end-3QFY2022,” they add.
The analysts have also cut losses on Lendlease REIT (LREIT), which they say appears to lack share-price catalysts in the near term.
The team’s alpha picks portfolio outperformed the benchmark Straits Times Index (STI) in 4Q2022 and 2022, gaining 5.5% and 8.1% on a market-cap weighted basis vs the STI’s
3.9% and 4.1% gain respectively.
For December 2022, UOB Kay Hian’s portfolio rose 1.6% on an equal-weighted basis which beat the STI’s 1.2% decline. Outperformance for the month was mainly derived from CapitaLand Investment, Genting Singapore and Thai Beverage (ThaiBev), which grew by 11.1%, 8.5% and 7.9% m-o-m respectively.
On the other hand, the main underperformers were Singtel (-5.5%), Keppel Corporation (-3.7%) and DBS (-3.6%) which fell by 5.5%, 3.7% and 3.6% m-o-m respectively.
“The STI’s decline in December mirrored the overall bearish tone in global markets as worries about a potential recession in major developed economies, as well as continued hawkish statements from the US Fed, weighed on sentiment,” write the analysts.
“While the continued easing of China’s Covid-19 restrictions lifted hopes for a timely boost to Asia’s regional economic outlook, worries have surfaced regarding the potential ‘export’ of new Covid-19 variants to the region and its negative ramifications,” they add.
See also: UOBKH raises TP on SIA to $6.22, FY2026 earnings to see lift on fuel cost savings
‘Buy’ MLT
Analyst Jonathan Koh is reiterating “buy” for MLT, citing a resilient balance sheet with low aggregate leverage of 37% and long weight average debt maturity of 3.6 years. He says that MLT benefits from the reopening of the economies in Mainland China and Hong Kong, which accounted for 44% of its portfolio valuation as of September 2022.
Koh’s target price for MLT of $1.87 is based on dividend discount model (DDM) with a 7.25% cost of equity and terminal growth of 2.8%.
As at 3.51pm, the STI was 5.59 points or 0.17% down at 3,245.73 points and shares in MLT were trading flat at $1.59.
