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Alpha Picks: A Mixed November
After a mixed November, we re-position our picks by removing ST Engineering and replacing it with SATS. We also introduce FUYU as an addition to our portfolio. WHAT’S NEW • A mixed November. November turned out to be a mixed month with some outperformers and underperformers within our alpha picks. On a portfolio basis, our picks gained an average of 1.0% mom, which compares with the FSSTI’s advance of 2.5% during the month. Within our portfolio, notable outperformers include OCBC and Valuetronics, with the latter rising 6.3% due to a rebound in sentiment due to the temporary ceasefire between the US and China. We like OCBC as we believe there is ample room for dividend payout growth. The underperformer within our portfolio is CSE Global, which retreated 3.3% as sentiment was hit by the reversal in oil prices.
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Singapore Banks
At the crossroads • Three trends to watch in 2019: (1) NIM expansion as key earnings driver; (2) credit costs normalising; (3) loan growth moderating from high base • Higher dividend payout ratio and dividend yield to support share prices • Singapore banks trading near 1S.D. below 10-year average P/BV multiple • BUY ratings for both UOB and OCBC; prefer UOB
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Check out our compilation of Target Prices