Strategy: Chinese markets have been on a tear since last Jul, liquidity has spilled into HK, and the HIS has soared 10% in two weeks. The rally could extend to Singapore if both rallies can be sustained over the next few months, Maybank-KE views.
Sectors that can benefit:
Consumer: Wealth effect could lift consumer sentiment in China & HK, in turn boding well for OSIM (Buy, TP $2.55) which derives half of revenue from Greater China. Super, in turn should benefit less given smaller exposure to Greater China, and is a smaller-ticket consumer staple.
Healthcare: Q&M (Buy, TP $0.71), which derives 14% revenue from Greater China, could benefit if the wealth effect motivates customers to take on the more expensive dental procedures.
Gaming: If the feel good factor overflows to gambling, Genting Singapore (Buy, TP $1.08) would benefit. PRC gamblers account for 30-40% of gaming revenue and 25-33% of EBITDA
Property: CapitaLand (Hold, TP $3.85) has substantial retail and integrated projects in China, which could capture greater retail spending. HK Land’s (TP US$8.56) assets are also largely in Greater China. These may be re-rated closer to China/ HK listed peers, which valuations have skyrocketed.
Retail/ Hospitality: Increased Chinese tourist arrivals would bode well for CDL Hospitality Trusts (not rated) and Starhill Global REIT (Buy, TP $0.93)
S-Chips: SIIC (Buy, $0.20), China Everbright Water (Buy, TP $1.26), United Envirotech (Buy, $1.93), Yangzijiang (Hold, TP $1.35) and Cosco (Sell, TP $0.43) may also be re-rated closer to their larger and better-followed peers in China.