DBS picks seven ‘stocks to watch’ that could gain from Avanda’s coming fund strategy

The firm adds in an email: “There are three themes running through the strategy: Value-up, Local Champions and Turnaround. This distinguishes us from most of the existing Singapore-only funds, which are benchmarked to the indices and have a significant overweight to large caps.”

Lim quotes The Edge Singapore’s July 21 report, which revealed details about the upcoming Avanda Singapore Discovery Fund, to be managed by Richard Chan, partner and head of equities; and Sherman Lim, portfolio manager, equities.

See also: F&N has bottled up opportunity that is ready to flow

Lim lists seven “potential candidates” that should fall under Avanda’s three focus themes.

Under the “value-up” theme, Lim thinks former STI constituent stock ComfortDelGro could be a likely pick, as it trades at an “attractive” price/earnings to growth (PEG) ratio and yield compared to its industrial peers.

Two other stocks under this theme are GuocoLand, which is trading at 0.4 times price-to-book value (P/B) with potential for restructuring into a stapled security; and F&N, on three potential corporate actions to improve liquidity and unlock value.

According to DBS analysts Chee Zheng Feng and Andy Sim, these three potential actions to improve liquidity are a privatisation for eventual combined listing with other ThaiBev’s non-alcoholic beverage assets, a share swap to restructure ThaiBev’s Thailand non-alcoholic beverage assets under F&N, and a share issuance to increase its 20.2% Vinamilk stake.

Meanwhile, under Avanda’s “local champions” theme, DBS thinks Sheng Siong could be a potential beneficiary as a household supermarket chain with “industry-leading margins and store network expansion”.

Another potential pick is UMS, which counts two leading global semiconductor equipment makers as key customers, says Lim.

Finally, two stocks could gain from Avanda’s “turnaround” theme: Raffles Medical on narrowing losses in China and refreshed capital management strategy and AEM Holdings on a ramp-up from new customers from FY2025 and onwards.

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