DBS Group Research analysts Yeo Kee Yan, Janice Chua and Chung Wei Le have lifted their year-end target for the benchmark Straits Times Index (STI) to 3,325, 4.5% higher from their previous estimate of 3,180.

The team’s current estimate is pegged to 13.48 times (+0.25 standard deviation) FY2022 price-to-earnings (P/E).

The higher estimate is based on the fact that only six out of the 30 index components are deemed to be directly affected by the tighter measures in May.

“The Singapore government has kept its 2021 GDP growth forecast at 4-6% as stronger-than-expected 1Q and improving external environment may offset the 2Q slowdown due to current anti-Covid measures,” they write in a June 2 report.

“[Our] bias is on the upside towards 3,300 by end July with support at 3,115.”

The higher STI estimate also comes as stocks under the brokerage’s coverage saw a second straight quarter of positive earnings revisions at +2.3% for the FY2021 and +1.5% for the FY2022.

“FY2021 earnings are now expected to be 2% above FY2019 (pre-Covid) levels. UOB and OCBC led positive revisions with +5.5% for FY2021 and +4.8% for FY2022,” writes the team.

With inflation back in focus and with a surge in metals and energy-related commodity prices, the team views upstream producers such as First Resources (FR) and, in part, Wilmar, as beneficiaries on the higher prices.

That said, it isn’t all negative for downstream names such as Yangzijiang (YZJ) and property developers City Developments Limited (CDL) and UOL, as some of the costs can be passed down to their customers, notes the team.

As the country’s economy is on its way to reopening, the team sees the recent share price correction as the “last chance” for investors to accumulate value stocks at a steal.

To be sure, Singapore is targeting to have at least 85% of its population to receive at least one dose of the vaccine by National Day (Aug 9) and be fully vaccinated by Oct 4.

On this, the team sees the healthcare sector such as IHH Healthcare and Q&M Dental as benefitting from the accelerated vaccination and testing programmes.

As a higher number of the population gets vaccinated, share prices in Covid-19-affected sectors will increase, too.

To this end, the team has identified retail malls (such as Frasers Centrepoint Trust or FCT, Mapletree Commercial Trust or MCT and Suntec REIT), leisure (Genting Singapore), food and beverage (Koufu) and public transportation (ComfortDelGro) as their picks amongst domestic reopening beneficiaries.

Should international borders be opened by the year-end, SATS, as well as hospitality REITs such as CDL Hospitality Trusts (CDLHT) and Far East Hospitality Trust (FEHT) will stand to benefit as well.