Singapore stocks in travel, China business stand to benefit from mainland’s reopening

SPECULATION is rife that mainland China will soon embark on some kind of reopening, after the nation announced last Friday (Nov 11) the easing of some travel and quarantine measures. If restrictions are indeed lifted, quite a few China-focused stocks listed in Singapore could be potential beneficiaries.

Analysts said counters that could ride on the upturn are those that have exposure to China, as well as those that would benefit from a revival of the Chinese tourist dollar.

In a report published on Monday, the UOB Kay Hian (UOBKH) research team noted that the Chinese government has been signalling, through its announcement on adjustments to Covid-related curbs, that it is taking preliminary steps to reopen the economy.

This augurs well for Singapore-listed stocks in the medium to long term, UOBKH said.

Property group CapitaLand Investment , supermarket and convenience store operator DFI Retail Group , conglomerates Keppel Corporation and Sembcorp Industries , hospital operator Raffles Medical Group , retail real estate investment trust Sasseur Reit , carrier Singapore Airlines (SIA) , commodities supplier Wilmar International and shipbuilder Yangzijiang Shipbuilding were singled out in the report as stocks UOBKH covers and that have material exposure to China, either from ownership of assets and/or because they derive a meaningful proportion of their profits from the country.

UOBKH’s report also noted that several small- and mid-cap technology stocks – among them Aztech Global , Frencken Group and Nanofilm Technologies International – either have clients or manufacturing facilities in China, while chemicals suppliers China Sunsine Chemical and Jiutian Chemical derive the majority of their profits from the country.

Phillip Securities Research’s senior analyst Terence Chua highlighted the two Singapore banks DBS and OCBC as stocks with meaningful exposure to China as well. He also flagged transport group ComfortDelGro Corp , inflight caterer and ground handler Sats , aviation engineering services provider SIA Engineering , resort and casino operator Genting Singapore , telcos Singtel and StarHub , and property group City Developments Limited (CDL) as tourism and travel-related plays expected to benefit from incoming Chinese tourists. CGS-CIMB’s picks are CapitaLand Investment, Yangzijiang Shipbuilding, Keppel Corp, Sats, and Genting, while RHB’s are Raffles Medical and Wilmar.

China was Singapore’s top source of tourists before the pandemic, accounting for 3.63 million of Singapore’s total visitor arrivals of about 18 million in 2019. They spent S$4.1 billion in Singapore that year, before Covid shut down borders in 2020. (The spending figure excludes expenditure on sightseeing, entertainment and gaming, which are not reported by the Singapore Tourism Board.)

The easing by the Chinese government paves the way for further lifting of restrictions in 2023, Bank of Singapore wrote in a report. But it also flagged the upcoming winter season, amid the spread of the Omicron variant, as a risk to watch.

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Companies with China operations have been hit by snap lockdowns to curb the coronavirus over the past year, sparking a sell-down in their shares.

Analysts have also taken a bailout package unveiled last Friday for the real estate sector as a positive sign. Chua of Phillip Securities said: “Those with exposure to China, like Keppel Corp, will also benefit from improvements in economic sentiment on property development, which is itself receiving US$56 billion in new funding to shore up the sector.”