Alpha Picks: Switch Out Wilmar For Bumitama, Drop Lendlease And add CapitaLand Investment
Our Alpha Picks rose 2.5% mom on an equal-weight basis and outperformed the STI which fell marginally by 0.2%. For Mar 22, we have switched out of Wilmar and into Bumitama as we prefer the latter’s purer exposure to CPO prices as well as having solid production growth in 2022. We cut our losses on Lendlease REIT and instead add CapitaLand Investment as we foresee earnings growth from its lodging segment as well as its funds management segment.
WHAT’S NEW
• A stronger February. Our Alpha Picks portfolio reversed its recent bout of poor performance, up 2.5% for Feb 22, vs the STI which was relatively flat at -0.2% mom. The broader market was hurt by weakness in financials and REITs while Aztech (+10.1% mom), Yangzijiang (+7.0%) and SingTel (+3.7%) were the key outperformers in our portfolio. The only stock that fell during Feb 22 was OCBC (-6.4% mom) which gave up most of its 9% mom gain from Jan 22 as its 4Q21 and 2021 results were weaker than expected.
• Making a switch in the plantation sector. For Mar 22, we take profit on Wilmar and instead have added Bumitama on the back of its strong 2021 results which we expect to continue into 2022. We expect the company to benefit from higher forecast CPO prices as well as better production growth with management guiding for 5-10% growth.
• We also add CapitaLand Investment (CLI) as we like it as a proxy to reopening, particularly in its lodging segment which we expect to drive earnings growth in 2022. In addition, the company has plans for a significant expansion of its private funds this year while continuing to convert its assets into funds under management and thus generate higher recurring fee-related earnings. Last but not least, we cut our loss on Lendlease REIT as we see few catalysts for the stock in the near term.