2Q24 Investment Themes - RHB Invest 2024-04-15: Focus On Yields & Bottom-Up Stock-Picking (Part 2)

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Theme 4: Stick with quality companies offering defensive earnings

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• To better hedge against such an uncertain macroeconomic environment in terms of interest rates and economic growth, we believe investors should continue to balance their portfolios by holding companies with relatively resilient profitability.
• We place a high value on investing in companies with proven dividend or profit histories, e.g. Sheng Siong (SGX:OV8), ST Engineering (SGX:S63).

Theme 5: Return of tourists remains a theme in Singapore and ASEAN

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• If the 2024 estimates are met, tourist expenditure will approach the pre-pandemic high of S$27.7bn observed in 2019, although visitor numbers will still fall short of the 19.1m recorded that year. We forecast tourist arrivals to reach 85-95% of pre-COVID-19 levels in 2024 – this amounts to 16-18m, exceeding the Singapore Tourism Board’s official estimate of 15-16m.
• Singapore appears to have a robust event pipeline, with Taylor Swift and Coldplay concerts, as well as the Singapore Airshow already completed in 1Q24. The STB has announced planned hotel openings and unique experiences at the two integrated resorts. It also announced that leisure and meetings, incentives, conferences & exhibitions (MICE) events such as the Anime Festival Asia 2024, 2024 Formula 1 Grand Prix, Rotary International Convention, and Singapore Food Festival will take place throughout the remainder of 2024.
• Singapore and China began their mutual 30-day visa-free arrangement on 9 Feb, and Singapore has already experienced a significant return of Chinese tourists. According to STB data, more than 327,000 persons landed in Singapore from China in February, accounting for ~96% of the total for 2019. The number is anticipated to increase in the coming months, with scheduled departure seats in the first quarter already at 101% of 2019 levels. Chinese tourists are also likely to spend more, despite a slowing economy and low consumer mood at home.
• In addition to aviation-related sectors, this should benefit service industries such as retail, F&B, healthcare, land transportation, and telecommunications. Our travel & tourism-related plays include: CDL Hospitality Trusts (SGX:J85), ComfortDelGro (SGX:C52), DFI Retail (SGX:D01), SingTel (SGX:Z74), ST Engineering (SGX:S63), Thai Beverage (SGX:Y92).

Theme 6: Bottom-up opportunities in the small-cap space

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Shekhar Jaiswal RHB Securities Research | https://www.rhbgroup.com/ 2024-04-15 SGinvestors.io

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