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OCBC |
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Oversea-Chinese Banking Corporation (OCBC SP) 2Q18 Results Preview: Laggard In NIM Expansion
We expect OCBC to register a healthy loan growth of 10% yoy and wealth management fees to grow 20.9% yoy with steady expansion of AUM in 2Q18. However, investors could be disappointed with an expected second consecutive quarter of flattish NIM (we anticipate NIM expansion to resume in 2H18) and a moderation in contribution from insurance due to a correction in the bond market. Management seeks to improve dividend payout ratio by re-instating its scheme dividend policy. Maintain BUY. Target price: S$13.52.
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Voluntary unconditional GO; offer price of S$2.10 incash
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| PHILLIP SECURITIES | DBS VICKERS |
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First REIT Continues to deliver despite rising interest rate environment SINGAPORE | REAL ESTATE (REIT) | 2Q18 RESULTS
NPI and DPU were in line with our forecast. All-in finance costs stable at 4%. 5.3% YoY boost in Gross Revenue and NPI driven by two acquisitions made in 4Q17. Refinanced S$100mn fixed rate notes due May 2018 with six-month term loan facility. Maintain Neutral with an unchanged TP of S$1.31.
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Keppel-KBS US REIT Core operations ahead Catch the next wave
We maintain our BUY call and TP of US$0.95 for Keppel-KBS US REIT (KORE). The stock offers investors the opportunity to catch the next leg of the US office market upturn. The 11 freehold office assets in the initial portfolio are located in seven key regional markets in the US which are seeing positive dynamics and should also benefit from tenants seeking cheaper rents and the flow of capital as investors pursue markets where asset prices have yet to rally as much as some gateway cities.
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RHB SECURITIES |
RHB SECURITIES |
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BreadTalk
Priced for Perfection Maintain NEUTRAL with new SGD1.04 TP from SGD0.93, with 5% downside, as we roll over our valuation to FY19F. Our conversation with management has us expecting earnings growth to accelerate in FY19F20F, as BreadTalk’s new F&B concepts mature. Still, given YTD uptick in share price, we think investors have priced in the strong execution of new store concepts and future earnings delivery. Potential catalyst includes stronger-than-expected earnings growth. Key risks are longer-thanexpected gestation periods and poor traction of new concepts in new geographies.
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United Overseas Bank Still a Play On Rising Interest Rates
Maintain BUY and SGD33.30 TP, 28% upside. UOB remains our Top Pick in the Singapore banking sector as future NIM widening would offset negative effects from the recently-announced government measures to cool Singapore’s residential property market. Management’s intention to lower its CAR could potentially provide investors with more dividends. We believe the surge in UOB’s P/BV between 2003-2007 (during FFR upcycle) could be repeated in the current FFR upcycle. We expect 2Q18 earnings to be in line with our expectations, with loan expansion supporting net interest income growth.
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