HOSPITALITY ALWAYS “ON THE TABLE”
On the other hand, analysts seem a little more optimistic about the outlook for the hotel sector.
RHB Singapore, for example, has Genting Singapore as one of its favorite stock picks for the coming year. Along with Singapore’s borders reopening to fully vaccinated people, the easing of travel restrictions by more countries is likely to continue and boost the integrated resort operator’s recovery, he said.
To be sure, the recovery may still miss a “last leg of the trail” as strict travel measures remain in key North Asian markets, namely China and Japan, which accounted for a third of pre-pandemic footfall in gaming and non-gaming facilities, CGS-CIMB analyst Tay Wee Kuang said in a report.
“resumption of pre-COVID operations remains on the table,” albeit at a slower pace.
Beyond that, business trusts that have hotels in their portfolios are also in the good books of some market analysts.
In addition to seeing better occupancy levels and room rates as travel demand grows, companies like Ascott Residence Trust and CDL Hospitality Trusts have also been looking at the “extended stay” asset class over the past year. the pandemic as part of diversifying their portfolios, Natalie Ong of Phillip Securities Research told CNA.
“They haven’t been idle. Instead, they tried to bolster their portfolio by incorporating other sources of stable income,” the research analyst said, adding that most hotel trusts are still trading around 15-20% below pre-pandemic levels.
Opportunities also exist in other parts of the Singapore market, analysts said, although they would advise investors to remain defensive amid rising inflation and a confluence of external growth risks.
“We expect the market to remain volatile with heightened external risks,” CGS-CIMB analysts said in their Singapore strategy report. “We favor a short-term defensive stance in REITs (real estate investment trusts) and high-dividend-yielding stocks and remain constructive on capital goods.”
The tech and banking sectors have also “returned to mid-range valuations and priced in some of the slower growth expectations,” presenting long-term opportunities, they added.
RHB, in a report dated June 1, reiterated its “dumbbell portfolio strategy, with a healthy weighting to defensive stocks.”
“The defensive sense when things go wrong, the business is still making money and that cash flow doesn’t completely disappear,” Mr Jaiswal said.
These include banks that benefit from the current environment of rising interest rates, companies that are less affected by inflationary pressures such as the commodities sector, as well as those that can continue to increase their margins. such as local telecommunications company Singtel or taxi operator ComfortDelGro.
Morgan Stanley equity analysts Wilson Ng and Derek Chang said Singaporean banks are “particularly well placed” to weather the headwinds of cost inflation and deliver sustained earnings and dividend growth, given that they are “positively influenced by both the rise in interest rates and the reopening theme”. .
“Valuation multiples do not appear to be overstated, so we believe banks may be more viable alternatives to real estate and travel stocks to hedge against high inflation,” they wrote in a report from the May 12.
Besides banks, Mr. Ng and Mr. Chang also like energy stocks, while tech stocks can “offer a secular growth story at much more attractive valuations than before.”