Singapore Banking Monthly
Consumer weakness offset by business loans
SINGAPORE | BANKING & FINANCE | UPDATE
Singapore loan growth stable at 2.08% YoY. Consumer loans (-0.39% YoY) contracted for the second time in decades, dragged by persistent weakness in housing loans.
Domestic deposits rose 7.4% YoY, held up by fixed deposit growth of 22.0% YoY, the fastest in twelve years. CASA deposits continues to contract at -1.1% YoY.
3M SIBOR stable at 2.002%, while 3M SOR dipped 22 bps to 1.833%.
Maintain the Singapore Banking Sector at Overweight. While the trade war affects investor sentiments in the near term, we believe the banks’ fundamentals remain intact to withstand risks and deliver growth on a sustained basis.
Koufu Group (KOUFU SP)
Positive Industry Macro And Good Traction In Operations
We remain positive on Koufu’s ability to deliver a 19% EPS growth in 2019, backed by: a) robust growth in the F&B macro data, b) better performance in the food court management segment on full-year contribution from Rasapura and new outlets, and c) stronger F&B retail segment from turnaround at both R&B Tea outlets and Elemen restaurants. Maintain BUY and PE-based target price of S$0.95. Koufu is undervalued at 10.3x 2019F ex-cash PE, vs peers’ average of 21.7x 2019F PE.
|MAYBANK KIM ENG|
Net gearing improves as Sleipnir sails
■ We visited SMM’s yard to see the world’s largest and strongest heavy lift crane, Sleipnir for Heerema. The unit was fully completed in 2Q19.
■ The payment term is milestone and we estimate c.S$300m of collection in 2Q19 with more payments in 2H19. Net gearing improves to 1.3x in 2Q19.
■ On the back of slower YTD order wins of c.S$200m, we taper our 2019 win expectations to S$1bn (from S$2bn). Our new TP is S$1.75.
Ascendas REIT (AREIT SP)
Growth Backing Yield
Fundamentals to drive re-rating
AREIT’s shares have continued to outperform; yields have compressed in line with a lower interest rate regime. Fundamentals however remain positive given resilient DPUs, backed by its concentrated business park and high-specs exposure (at 60% of its Singapore AUM) and longer 4.2- year WALE. DPU growth drivers with: (1) rental recovery backed by tapering supply, (2) rising overseas contribution, and (3) acquisition and AEI catalysts, look set to crystallise, and could drive a rerating of its shares. We fine-tuned estimates following further portfolio details. AREIT remains our top S-REIT pick on fundamentals, scale and trading liquidity. Reiterate BUY and raise our DDM-based TP marginally to SGD3.30 (COE: 6.9%, LTG: 2.0%).
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