UOB Kay Hian adds SPH, PropNex to March alpha picks

UOB Kay Hian has added Singapore Press Holdings (SPH) and PropNex to its alpha picks for the month of March. It also took profit on ST Engineering to lock in gains of 12 per cent, according to a Friday report. 

The brokerage is maintaining its "hold" call on SPH - which publishes The Business Times - with an unchanged target price of S$2.22. It added that the stock has an attractive yield of 5.8 per cent, assuming an 11 Singapore cent dividend for fiscal 2020.

The media company's share price decline also offers an opportunity to accumulate, said UOB Kay Hian analysts Lucas Teng and John Cheong.

SPH shares closed on Friday at S$1.89, up S$0.01 or 0.5 per cent. 

The analysts added that SPH's recently acquired aged care assets in Japan and Canada "provide defensiveness" via investment into the ageing population trend. The larger Canada asset is also expected to add S$7.7 million in earnings on a full-year basis.

Increased health advisory advertisements on the Covid-19 outbreak in local newspapers can also provide temporary relief to SPH's media decline.

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"Our page count of Feb 20 Straits Times suggests the decline has diminished compared to the double-digit percentage decline seen previously," Mr Teng and Mr Cheong added.

Meanwhile, PropNex was added to UOB Kay Hian's alpha picks due to its strong net cash position of S$81.6 million as at end 2019, which represents 40 per cent of its market capitalisation.

PropNex has a "buy" call and target price of S$0.68. PropNex shares closed at 55 Singapore cents, down 0.5 cent or 0.9 per cent on Friday. 

The real estate firm also demonstrated strong cash generation capabilities with positive and growing free cash flows in the last five years, said UOB Kay Hian analysts Loke Peihao and Adrian Loh.

Moreover, PropNex - seen as a market leader in project launches - will be able to ride on its 2020 launch pipeline with its "strong execution" amid the current low-interest-rate environment which supports home mortgages, the analysts added.

Other picks include small to mid-caps such as Food Empire, CSE Global and Japfa.

UOB Kay Hian said its portfolio saw a marginal decline of 0.7 per cent month on month but outperformed the FSSTI by 3.8 per cent.