Top 5 Singapore stocks impacted by the coronavirus

Last Friday (28 February), Singapore stock benchmark Straits Times Index (STI) suffered its steepest drop since July 2019, falling 3.82% to a 14-month low of 2,992.071. The decline came after some countries reported their first coronavirus cases, and the US reported its first case ‘without a known origin’.

Driving the downward momentum were some of STI’s largest constituents, with Singapore’s top three money lenders among them.

Here are the five large-cap equities that experienced the highest trading volume and share price fluctuations for the week ending 28 February, based on IG data.

Read also: Top 5 Singapore stocks to watch for February 2020

DBS Group: ↓3.08%

DBS Group, Singapore’s largest bank by market capitalisation, was last week’s most traded Singapore equity.

In terms of share price, the group erased 3.08% in value to a six-month low of S$24 per share on IG’s platform as of Monday 02 March.

What analysts say:

Analysts have also been conservative in their recent estimates of the company’s financial and stock performance.

OCBC’s research team had maintained a ‘hold’ rating and price target of S$27.50 on DBS Group’s stocks, stating that it expects ‘share price performance ahead to be influenced by the Hong Kong/China outlook’.

Meanwhile, UOB Kay Hian analyst Jonathan Koh maintained a ‘buy’ rating on the stock with a price target of S$28 per share, down from S$28.65 previously, while RHB Invest gave the stock a ‘neutral rating’ and lowered its price target from S$25.80 to S$24.80 per share.

OCBC: ↓3.64%

IG Singapore’s second most traded stock last week was Oversea-Chinese Banking Corporation (OCBC).

The second most valuable money lender in Singapore, however, recorded a 3.64% plunge in share price to close at a three-month low of S$10.62 per share. This was also the biggest drop among all Singapore banks for the week.

What analysts say:

UOB Kay Hian's Koh has maintained an ‘overweight’ rating on the stock and a share target price of S$12.80 per share, on the ‘positive view’ that Singapore banks are likely to offer ‘attractive dividend yields of above 5%’ this year. He added that he sees S$10.18 per share as a reasonable buy-in price for OCBC shares.

Maybank Kim Eng’s Thilan Wickramasinghe predicted that the group’s near-term performance will be dominated by COVID-19 risks, lowering his earnings per share forecast for 2020 by between 4% and 7%. Still, he raised its target price for OCBC to S$11.57 from S$11.26 previously, maintaining a ‘hold’ rating alongside a 5% upside.

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UOB: ↓3.62%

In third position (by volume of trades placed) was United Overseas Bank (UOB).

The bank saw its share price retreat 3.6% for the week ending 28 February, with most of the decline occurring on Thursday 27 February – the same day that the S&P 500 recorded its largest single-day drop of 4.42%.

What analysts say:

Taking account of the coronavirus, Leng Seng Choon, analyst at RHB Invest, has cut his FY20 net profit prediction for the group by 8% to S$3.89 billion and a lower net income margin of 1.73%, citing an ‘uncertain economic environment’.

He maintains a ‘neutral’ rating on UOB’s shares, while lowering his share price target by 3%.

CIMB researchers said that the bank, just like DBS and OCBC, will see credit costs ‘ticking higher due to COVID-19’, but that macro overlays for Hong Kong political and US-China trade tensions will help to ‘cushion the blow’.

They reiterated an ‘overweight’ rating but lowered the share price target from S$29.10 per share to S$28.39 per share.

Wilmar International: ↓6.62%

The share price of Singapore-based agriculture and food manufacturing group Wilmar International had a big fall last week, alongside massive fluctuations. The stock rose as much as 4.5% on Tuesday 25 February, before crashing 6.62% to a one-month low of S$3.95 per share to close the week.

What analysts say:

Just prior to this stock movement, CIMB analyst Ivy Ng had said that there was more room for Wilmar share price to grow, as the market had yet to price in Wilmar’s Chinese subsidiary Yihai Kerry Arawana’s upcoming Shenzhen Stock Exchange listing, as well as any potential dividend bonus post-public offering.

She has maintained an ‘overweight’ rating and ‘standard operating procedure-based target price of S$4.58’ for the stock.

Meanwhile, OCBC has raised its target price from S$4.26 to S$4.64 per share on a ‘buy’ rating, while UOB has reduced its fair price estimate to S$4.60 per share from S$4.75 previously.

Read also: Top 5 Singapore stocks to watch for February 2020

Singapore Airlines: ↓6.54%

While the 2019-coronavirus’ burgeoning case count last Thursday had triggered massive sell-offs for financial markets everywhere, there was perhaps no Singapore equity that was harder hit than national carrier Singapore Airlines (SIA), which continues to see its share price hit new lows.

Last week, the group saw its share price fall 6.54% to a 16-year low of S$8 per share, as the number of coronavirus cases globally grew.

The airline had admitted in its most recent earnings release that the growing scale of the COVID-19 outbreak is presenting ‘significant challenges’ to the business.

It revealed that demand for services to Mainland China has been severely affected. The flagship airline and SilkAir have drastically reduced frequencies on all Mainland China routes for February and March 2020, while Scoot has suspended all flights to Mainland China until 28 March 2020 (end of the Northern Winter 2019/20 operating season).

What analysts say:

Even prior to this latest guidance from SIA Group, analysts were already predicting a fall in travel demand and net profits for the airline company.

Raymond Yap, senior analyst at CGS-CIMB, said on 05 February that he expects SIA to ‘report net losses for the next half year from the Wuhan viral epidemic as demand for flights to China and non-China destinations are hurt’.

He gave SIA stocks are ‘hold’ rating and a price target of S$8.46, down from S$10 per share previously.

UOB Kay Hian analysts also downgraded the stock to ‘underweight’ with a share price target of S$9.10, on the prediction that the airline’s passenger traffic numbers will decline by 10% from February to end-March, while FY20 net profit will fall by 29%.

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