Which companies will be the hardest hit by China’s COVID-19 resurgence?

UOB Kay Hian said there is a total of eight that will be most affected.

Eight Singapore companies are at risk amidst a resurgence of COVID-19 in China, UOB Kay Hian said.

In a report, the analyst named China Sunsine, Jiutian Chemical, Sasseur REIT, Trans-China Automotive, Yangzijiang, Innotek, Dairy Farm, and Nanofilm as the companies which would likely see their "2022 profitability come under pressure should the country’s zero-COVID policy result in business stoppage or interruption.”

According to UOB Kay Hian, these companies derive over 70% of their revenue from China, whilst the first five also have 100% exposure to the country.

Despite the risk, the analyst has yet to change their earnings forecast for these companies, adding that the impact of the resurgence “at present would be mild.”

Meanwhile, the analyst said large-caps such as Ascott Trust, Capitaland Investment, Genting Singapore, Mapletree Industrial Trust, OCBC, Singtel, Sembcorp Industries, Thai Beverage, Venture Corp, Wilmar, and Yangzijiang all have minimal exposure to China, thus safe to invest in.

Looking ahead, UOB Kay Hian forecast a 10.7 year-on-year full-year earnings growth for the combined large-cap and REITs sectors, excluding the aviation sector.