KGI tipped a strategy of selling into strength and building up a defensive portfolio over the next 12 months, tipping Thai Beverage as a play in this theme.
Thai Beverage has been hit by a decline in beer consumption since 2016 amid Thailand’s mourning period and on an excise tax, KGI said in a note on Tuesday.
“But we expect beer consumption to rebound soon due to improvements in wage growth and the steep rise in the Thailand’s consumer confidence index to a three-year high in July,” KGI said. “We expect beer consumption to rebound in the coming quarter and efficient marketing strategies to continue capturing market share for the company.”
It kept a Buy call on ThaiBev with a S$0.75 target price.
It also tipped supermarket operator Sheng Siong as a consumer staples play in its defensive portfolio.
“We believe SSG’s investment proposition is twofold, as it provides stable cash returns and offers organic growth through margin expansion,” KGI said. “Given its defensive business model and almost no foreign exposure, Sheng Siong’s business is relatively sheltered from global economic uncertainty.”
It estimated profit after tax and minority interests for 2018-20 would grow 6.5 percent to 8.6 percent.
KGI rates Sheng Siong at Buy with a S$1.24 target price.
Other names in KGI’s defensive portfolio ideas are Singtel, ST Engineering, ComfortDelGro, Raffles Medical Group, Sembcorp Industries and Netlink NBN. Among the REITs, it tipped Frasers Centrepint Trust, Keppel DC REIT, Manulife US REIT and Mapletree Industrial Trust.