Aviation, tourism-linked counters rise on easing of measures

Singapore

TRANSPORT, hospitality and select consumer and healthcare stocks are expected to benefit from Singapore's latest easing of a slew of Covid-19 measures, with some already seeing surges throughout the trading session on Thursday (Mar 24).

Prime Minister Lee Hsien Loong had announced these changes, including the streamlining of travel requirements, in a nationwide address at 11 am.

Shares of Singapore Airlines (SIA) went up 2.9 per cent, or S$0.15 at S$5.33, with 13.7 million securities changing hands at 11.45 am, shortly after the end of Lee's televised speech. It rose to $5.42 before eventually closing at $5.40.

Group handler Sats gained more than 5 per cent while hospitality group Genting Singapore - one of the most traded counters on Thursday - closed 3.8 per cent higher at $0.825.

While aviation and other travel-related stocks like SIA and Genting Singapore are obvious beneficiaries from the scaling down of Covid-19 restrictions, DBS equity analysts Yeo Kee Yan and Yong Woon Bing said that simplifying travel requirements could also boost occupancy and activity levels for hospitality and tourism plays, if arrivals to Singapore do pick up. Hence, they picked counters such as CDL Hospitality Trust and Far East Hospitality Trust that could potentially see gains.

"The pace of recovery could be quicker as well in view of a wider Asean (Association of South-East Asian Nations) opening," they added.

The duo also expect medical tourism to make a comeback, which may help boost the stocks of Raffles Medical Group and IHH Healthcare, although this may be slightly offset by lower demand for Covid-19 testing.

The increase in the maximum size of social gatherings and allowing more workers to come back to office will drive increased mobility and may benefit transport stocks like ComfortDelGro, as well as coffee-shop operators such as Kimly, noted Yeo and Yong.

Suntec Reit could also see increased activity for meetings, incentives, conferences and exhibitions with the government increasing the capacity limit for large events to 75 per cent.

In a research note sent out on Thursday by Citi, analysts also noted that stronger investor interest could boost commercial and office Reits, like CapitaLand Integrated Commercial Trust, Lendlease Global Commercial Reit and Keppel Reit.

Some of this positive sentiment on the Reits may have already been reflected in Thursday's market. While the unit price of some only had modest gains, others like CDL Hospitality Trust and Lendlease Global Commercial Reit jumped by more than 5 per cent.

While these stocks that have been affected by measures to curb the spread of Covid-19 may be making a comeback, those that benefitted at the height of the pandemic would be negatively impacted by Thursday's announcement, said Terence Wong, chief executive of fund-management firm Azure Capital, who did not want to name specific stocks.

Some of these counters could include glove and personal protective equipment (PPE) manufacturers. The share price of PPE manufacturer Medtecs International fell by 4.3 per cent, or S$0.01 at S$0.225.

DBS analysts Yeo and Yong said that supermarket Sheng Siong, which saw its share price rise significantly in 2020, could see grocery demand normalise, although this is likely to take time and demand will remain above pre-Covid levels.