DBS Group Research Model Portfolio - Blue Chips
You look to include blue chips into your portfolio to provide steady growth over a longer time period. Blue chips tend to be more stable and their holding period can extend beyond a year.
The Blue Chips portfolio gained 11.1% on an average return basis, outperforming the STI's 10% gain. ST Engineering and SembCorp Industries performed best. We remove Ascendas REIT given its fairly limited upside to TP.
CAPITALAND
- Incremental earnings growth momentum from its core residential, retail mall business and Ascott firming up well
- Upside to valuations from potential asset recycling of mature assets into funds/REITs
- Attractive valuations at close to 2009 levels
Company Guide:
CITY DEVELOPMENT
- Incremental earnings growth momentum boosted by asset sales/ stronger operational results from commercial portfolio
- Valuations below historical through level
Company Guide:
ST ENGINEERING
- Steady earnings and dividends provide safe haven in current uncertain and volatile market environment.
- Final dividends to be announced soon. Smart city contracts may be upcoming.
Company Guide:
WILMAR INTERNATIONAL
- Beneficiary of low soybean prices, Indonesia's export tax structure, biodiesel mandate and rising palm oil prices.
Company Guide:
SEMBCORP INDUSTRIES
- Stripping out market capitalisation of SMM and Salalah, utilities business is valued at unjustifiably low valuation of 5x PE and 0.5x PB.
- We also expect the reversal of price trend in the event of elimination of SMM privatisation overhang.
Company Guide:
Previous Report:
Singapore Research Team
DBS Vickers
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http://www.dbsvickers.com/
2016-03-17
