SEVERAL Asean counters are expected to see some upside from China’s incoming recovery and growth stabilisation as the country’s government regulations turn more supportive, said DBS Group Research on Monday (Nov 6).

For FY2024, the research team forecast gross domestic product growth of 4.5 per cent for the market. Although this is a step down from China’s historical average, DBS believes it is nevertheless a “ballast” amid a time of slowing global growth.

Companies that specialise in industrialisation and urban development, such as Thailand’s Amata Corporation and Singapore’s Keppel Corporation : BN4 0%, will likely benefit from China’s growth and recovery.

Amata, a leading industrial estate developer, could gain from robust demand for industrial land sales, DBS said.

“We believe Amata is a beneficiary of the production relocation and diversification from China to South-east Asia, thanks to its strong presence and large land bank in Thailand and Vietnam, strategic locations for foreign direct investment into the region,” the research team added.

It has a “buy” recommendation on the Thai developer, with a target price of 30 baht. Similarly, it has a “buy” recommendation on Keppel Corp and a target price of S$8.05.

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Through its subsidiary Keppel Land, Keppel Corp is one of the largest foreign real estate investors in urban development in Vietnam, which has been identified as a key market after China and Singapore, DBS noted.

Commodities counters, particularly those involved in steel or coal, could gain from more stimulus-aided and infrastructure spending. These include Indonesian coal miner Adaro Energy and Trimegah Bangun Persada (TBP), a fully integrated nickel player.

DBS likes Adaro for its exposure to thermal and hard-coking coal, which could see higher selling prices. Furthermore, Adaro has a low-cost structure which enables it to capitalise on the trend of recovering selling prices. It also has a concrete diversification plan – an expansion to the aluminium smelter and hydropower sectors.

It has a “buy” call on Adaro and target price of 3,700 rupiah on the counter.

DBS also recommended “buy” for TBP and a target of 1,250 rupiahs. It believes TBP, a nickel company, could benefit from the ongoing pivot to renewable energy. Starting out as a miner in 2004, the company has developed an integrated value chain for nickel, a key material for electric vehicle (EV) battery cathodes.

Nickel, along with copper, is expected to benefit from China’s support for EVs and the clean energy transition, DBS said. Indonesia is also on the rise as a nickel hub due to its ample nickel reserves, following strong demand from EVs and a recovery in demand for stainless steel products.

Lastly, Asean companies that could benefit from the trend of diversification outside of China include Singapore technology companies such as UMS Holdings, AEM Holdings : AWX 0%, and Grand Venture : JLB 0% in the upstream space, and Venture and Aztech Global : 8AZ 0% for downstream players.

“With key production facilities outside China, these companies could be key beneficiaries of a growing number of players adopting a China+1 strategy,” DBS said.

It noted that Chinese investment in Asean has grown substantially over the past decade, driven by the Belt and Road Initiative and influenced by US-China trade tensions.

DBS’ top pick is UMS Holdings : 558 0%, which will ride on semiconductor recovery, and Venture Corporation : V03 0%, which is trading at an attractive price-to-earning valuation of below two standard deviations from its five-year average.

It has “buy” calls on both counters, with target prices of S$1.51 and S$15.10, respectively.