UOB Kay Hian adds Nanofilm to its alpha picks portfolio, removes AEM, Venture and CDG

Felicia Tan
3-min read

The addition comes as the team believes Nanofilm’s new product launches and market expansions will lead to a strong 2HFY2022.

UOB Kay Hian has added Nanofilm to its alpha picks portfolio for the month of September.

The addition comes as the team believes Nanofilm’s new product launches and market expansions will lead to a strong 2HFY2022.

At the same time, the team has removed AEM from its portfolio as it expects a weaker 2HFY2022 from the company.

Meanwhile, the UOB Kay Hian team has also removed ComfortDelGro (CDG) from its alpha picks portfolio due to CDG’s recent exclusion from the benchmark Straits Times Index (STI). Additionally, the team has also chosen to take profit on Venture due to a lack of near-term catalysts.

In August, the team’s alpha picks portfolio outperformed the STI, increasing by 2.9% on a market cap weighted basis compared to the market’s 0.3% increase.

During the month, the tech manufacturing, banks and industrial sectors were the “clear outperformers”.

“Despite global geopolitical uncertainty, most corporates continued to deliver y-o-y profit growth, in line with market expectations. In addition, overall market sentiment marginally improved as expectations for significant future interest rate hikes eased somewhat,” the team writes.

It adds: “However, facing an uncertain global macroeconomic outlook, stock investors were broadly on the sidelines, leading to a muted 0.3% increase for the STI in August as compared to July which saw a 3.5% increase.”

In August, five stocks within the UOB Kay Hian team’s alpha picks recorded positive absolute returns of over 4%. These were led by Sembcorp Industries, which saw a 17.9% growth m-o-m, DBS, with a growth of 4.7% m-o-m and Yangzijiang Shipbuilding, with a growth of 4.3% m-o-m.

AEM and Venture Corp registered m-o-m growths of 4.1% and 4.0% respectively.

CapitaLand Invest (CLI), on the other hand, saw a weak month, registering a share price decline of 5.9% m-o-m after its weaker-than-expected 1HFY2022 results.

UOB Kay Hian analyst John Cheong has kept “buy” on Nanofilm with a target price of $2.72.

“Nanofilm is optimistic about the outlook of the markets it serves and believes that its deep-tech solutions will address the business opportunities available in these markets, independent of the shorter-term macro trends,” he writes.

“Nanofilm’s multiple growth avenues in different industries, which are driven by its deep-tech and business unit (BU) structure, are in different phases of growth. In addition, Nanofilm’s 10% y-o-y increase in interim dividend to 1.1 cents is also a signal of its confidence,” he adds.

The team is also keeping its “buy” calls on Sembcorp Industries, DBS and Yangzijiang Shipbuilding with respective target prices of $4.10, $43.60 and $1.16.

The STI closed 9.79 points higher or 0.31% up at 3,215.48 points on Sept 5.

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