ANALYSTS SAY: Buy, Sell, Hold (15 Feb '18)

OCBC

4Q17: in-line results, non-NII to continue to shine

■ FY17 net profit of S$4,146m (+19% yoy) was in line with consensus and our expectations at 103% of our FY17F. 4Q17 net profit of S$1,033m was at 26%.

■ Similar to peers, OCBC took advantage of the upcoming FRS 109 and cleaned up its O&G loan book. We expect O&G exposures to be contained with this move.

■ Fully-loaded CET1 CAR rose to 13.1%. A final DPS of 19 Scts was declared, bringing full-year DPS to 37 Scts (+3% yoy).

■ While management is comfortable with CAR of 12.5%, it sees growth opportunities to re-deploy internal generated funds.

■ Reiterate Add with a higher TP. We expect OCBC’s non-NII franchise to continue to shine.

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United Overseas Bank (UOB SP)

Moving Steadily

EPS and TP raised; Maintain BUY

Although FY17 earnings achieved only 94% of our forecast and missed our expectation, we continue to believe UOB can generate robust earnings growth ahead in a cyclical upturn. With our revised est.’s, sustainable ROE is now 12.1% (11.7% previously), and COE 10.1%, and growth rate 3.5% (both unchanged). Our TP is raised 8% to SGD29.33 based on 1.3x FY18E P/BV (from 1.2x previously), in line with its historical mean. Maintain BUY.

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Singapore Airlines (SIA SP)

Analyst Briefing Takeaways: SIA Is Now More Sanguine On Yields

SIA noted that 3QFY18 earnings are reflective of efforts to maximise revenue by stabilising yields and improving load factors. The marginal decline in pax yields is not indicative of parent airline performance as RASK grew by 2.4% yoy. SIA also expects MRO costs to decrease significantly as they start to return leased planes. Going into 4QFY18, we expect a reversal from the loss in 3QFY17, underpinned by strong cargo yields and improving pax yields. Maintain BUY. Target price: S$11.90.

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Lippo Malls Indo Retail Trust (LMIRT): Gone to the barber’s

Lippo Malls Indo Retail Trust’s (LMIRT) 4Q17 results were within expectations. Altogether, FY17 revenue increased 5.0% to S$197.4m or 100.4% of our forecast, while FY17 DPU ended flat at 3.44 S cents or 99.4% of our forecast. Despite the negative newsflow in the past few months, the impact of these issues on our DPU forecasts has been less significant than what headlines might suggest. Altogether, we now forecast a DPU growth of -3.2% in FY18F, and -1.5% in FY19F. Nonetheless, we recognize that the negative sentiment related to a potential rights issue will continue weigh on the REIT, as investors may be unwilling to accumulate additional units in the interim. Given this overhang as well as the absence of near-term catalysts, we have decided to apply a 10% haircut to arrive at a fair value of S$0.405, down from our previous fair value of S$0.460. We downgrade LMIRT from Buy to HOLD.

DBS VICKERS

Chip Eng Seng

Attractive Valuations and Yield

Integrated real estate developer with strong capability to leverage upcoming property upturn.

Singapore-based Chip Eng Seng Corporation (CES) has been selectively acquiring projects in Singapore and overseas which are ripe for the picking. Most of the group’s residential projects have already been substantially sold and, together with an estimated construction order book of S$560m (as at Jan 2018), CES has locked in at least S$1bn in sales – which will be recognised progressively, underpinning strong earnings visibility in the coming years.

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