Analysts expect the stock market volatility to last for a while longer. However, they are also optimistic that things will start to get better in the second half of 2023. Singapore stocks remain well-placed to benefit from economic recovery this year based on their strong balance sheets and pricing power.
Based on this backdrop, we have shortlisted Keppel Corporation (SG:BN4) and Thai Beverage (SG:Y92) from STI, both of which have more than 20% upside potential for share price growth. Along with share price growth, these stocks also tick the box for value investors with their higher dividend yields.
Let’s see what makes them the analysts’ favorites.
Keppel Corporation Limited
Through its subsidiaries, Keppel Corporation is involved in a variety of businesses, such as energy, marine, asset management, urban development, and so on.
The company stock has been an analysts’ favorite in the Singapore market and has generated returns of 28.6% in the last year.
The company posted a decline of 9% in its net profit of S$927 million in 2022 as compared to 2021. The performance was supported by its operations in asset management and energy businesses but was offset by reduced earnings from the urban development segment. For the second half of 2022, the company’s earnings fell by 40% to S$429.1 million.
Even with a decline in numbers, analysts are confident in the company’s capabilities to perform at this level in a difficult environment.
Analysts are also bullish on the company’s proposed deal with Sembcorp Marine (SG:S51) to merge its offshore and marine businesses. With this deal, both companies are looking at creating a global leader in renewable energy in the offshore and marine industries. This transaction will also result in significant synergies for Keppel, given these companies’ strong positions in the energy transition and order book value.
Is Keppel a Good Buy Now?
According to TipRanks’ rating consensus, Keppel stock has a Moderate Buy rating, based on four Buy and one Sell recommendations.
The average BN4 target price is S$9.15, which has an upside potential of 27.4% from the current price level.
Thai Beverage Public Co
Thai Beverage is among the largest beverage companies in Southeast Asia, operating in beer and non-alcoholic drinks.
The company stock has shown some good momentum in the last three months, with a growth of 17%. The company is seeing a favorable change in its operations with the opening of borders and fewer travel restrictions in its markets in Asia.
This was equally visible in its annual results, where it posted higher beverage sales in Thailand and neighboring countries. The company’s revenues increased by 13.2% to ฿272 billion, mainly driven by the sales of its beer segment. The net profit for the year also increased from ฿27.3 billion in 2021 to ฿34.5 billion in 2022.
With the rebound in the travel sector, analysts are expecting a solid year of growth for the company in 2023. The higher costs from rising inflation do pose some threat to the company’s margins, but are expected to ease a little by the end of the year.
Is Thai Beverage a Good Buy?
With a complete majority of eight Buy recommendations, Thai Beverage stock has a Strong Buy rating on TipRanks. The Y92 target price is S$0.84, representing a 22% change from the current price level.
Conclusion
Keppel and Thai Beverage have proven their strength as companies by navigating the challenging times in a smooth way. Moving forward, analysts are positive on the long-term outlook and rate the stocks as Buy.
