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STI to reach 3,500 in 2022: UOB Kay Hian

The bullish forecast is attributed to the strong GDP growth in 2021.

Research by UOB Kay Hian (UOBKH) showed the Straits Times Index (STI) will continue to perform well in 2022.

The study revealed an aggregate 29% earnings per share growth in 2022 with all sectors, except aviation, to register year-on-year earnings growth. It also expects property, shipyards and land transport to register the strongest earnings growth.

Using the top-down methodology, UOBKH forecasted the STI to reach 3,500 by the end of 2022. It implied about 13% upside from current levels, which underlines bullishness for the market. The 2022 STI target is based on 20% earnings growth for 2022 and targets PE and PB multiples of just under 14x and 1.0x, respectively. Both target multiples are around 10% discount to the past five-year average for the index.

The analyst's top large-cap picks are City Developments, ComfortDelGro, DBS, Genting Singapore, Keppel Corp, OCBC, Raffles Medical, Sembcorp Industries, Sembcorp Marine, ST Engineering and Thai Beverage.

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