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China Yuchai International

Revving up for new emission standards ahead


■ 3Q18 results were slightly disappointing, with 9M18 PATMI forming just 71% of our FY18F forecast.

■ Nevertheless, the outlook could improve in FY19F as Yuchai revs up for the potential demand upcycle ahead of the National VI and Tier 4 standards.

■ Maintain Add with a lower TP of US$26.33.


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Banks: Trade war won’t break the banks!


The market is in risk-off mode and banking stocks have languished despite a fairly good set of 3Q18 results. With more rate hikes ahead, we expect NIM to stay at current or higher levels. Based on our estimates, we expect FY18 to be a record year for the banks. While market conditions are likely to be challenging, we believe that current share prices have priced in most of the negatives, especially since the financial index is already down 10.5% YTD and down 18.4% from the year’s high. We believe that the downside is likely to be limited at current level. In addition, current yields range from 3.7% to 5.2%. We have an overweight on the banking sector, highlighting it as one of our top picks for 2019.


Singapore Telecom Sector


TPG may not disrupt, attractive yield and valuations

• TPG’s abysmal capex so far implies room for positive surprises in 2019

• Netlink is our top pick for 6.6 yield and front-loading of revenue from StarHub’s accelerated fibre migration

• We like StarHub for its 5.6% yield, -2SD valuation and potential upside to consensus FY19F/20F earnings. We also like Singtel for its assured DPS of 17.5 Scts (5.7% yield) and -1SD valuation


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LionelLim8.16Check out our compilation of Target Prices

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