ANALYSTS SAY: Buy, Sell, Hold (8 June 2017)

Hupsteel Limited

A local steel stockist with sizeable hidden assets

■ Hupsteel is a local steel stockist serving the marine, O&G and construction sectors.

■ It is a “net-net” stock (current share price below net current asset value), with sizeable fixed assets and long-term financial investments.

■ Group net profit returned to positive territory of S$0.5m in 2QFY6/17.

■ It trades at 0.54x trailing P/BV or 0.42x RNAV if investment properties were revalued at the fair value disclosed in its FY16 annual report.

■ Group recently bought back its shares, with the highest transacted price at S$0.715.

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Keppel Corporation: To be a true conglomerate

Though almost synonymous with Offshore & Marine, Keppel Corporation is a multi-business group with different verticals in the same line of providing solutions for sustainable urbanisation. In FY16, property contributed 79% of net profit, followed by infrastructure at 13%, as well as investments and O&M. The general outlook for property markets in Asia remains positive in the long term, driven by continuing urbanisation, and Keppel is well-positioned to ride on a property upturn. In the infrastructure segment, Keppel is involved in energy and environmental infrastructure, as well as data centres and logistics. With Keppel Capital, the group is also able to connect investors with high-grade real assets such as data centres, power and desalination plants, LNG vessels and FPSOs. Co-investments also allow the group to grow faster without putting a strain on its balance sheet. As such, we expect to see the asset management business to gain increasing prominence in the group. Maintain BUY with fair value estimate of S$7.36 on Keppel Corp.

UOB KAYHIAN

Banking – Singapore

DBS Outperforms On Flawless Execution And Stronger Growth

DBS generated the highest PPoP growth with a 3-year CAGR of 8% (OCBC: 6.8%, UOB: 4.5%) and the highest PPoP/gross loans of 220bp in 2016 (OCBC: 214bp, UOB: 202bp). Its PPoP/gross loans is on an uptrend too. While OCBC is more conservative to recognise more NPLs, DBS is more proactive to write off and clean up NPLs. Maintain OVERWEIGHT. BUY DBS (Target: S$23.30) and OCBC (Target: S$11.70).

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