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United Overseas Bank (UOB SP)

Preserving value


Stability amidst volatility UOB’s 1H19 earnings came in well ahead of our/Street estimates. Resilient loan growth, strong trading income were key drivers. YoY NIMs disappointed again, but the QoQ improving trend as funding costs fall should allow for a better 2H19. Macro weakness in Singapore should be tempered by exposure to higher growth markets where nearly half UOB’s loans are booked. Rising NPL risks are a key concern, but strong provisioning levels following aggressive kitchen sinking in the past opens potential for write-backs. Together with strong capital and liquidity positions, we believe UOB is well placed to face macro volatility, while offering a 4.9% dividend yield with upside risks. We raise our DDM-based TP by 1% to SGD29.13. Maintain BUY.


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Oversea-Chinese Banking Corp Ltd

Catch-up in NIM expansion 


 2Q19 revenue/PATMI was in line with our estimates.

 Strong NIM expansion of 12bps YoY and 3bps QoQ to 1.79%, due to a catch-up in loan repricing and better utilisation of deposits.

 Wealth management fees surged 17% YoY to $262mn, its highest level in five quarters.

 Life insurance profit from GEH fell 26% YoY due to decline in discount rate used to value long-term insurance contract liabilities.

 Credit costs normalised to 15bps after higher provision was taken in 1Q for the OSV sector. NPL ratio remained stable at 1.5% (2Q18: 1.4%).

 Declared interim dividend of 25 cents/share, 25% higher than a year ago.

 We maintain ACCUMULATE at a lower target price of S$12.50 (previously S$12.70). Our TP is based on target price-to-book of 1.3x, derived from the Gordon Growth model. We toned down terminal growth from 2.5% to 2.0%.


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Genting Singapore (GENS SP)

High Win Rate Offsets Decline In Mass Gaming


 Maintain NEUTRAL with a lower TP of SGD0.97, from SGD1.02, 8% upside plus 4% yield. 2Q19 result met our expectations. 2Q19 adjusted EBITDA grew 11% YoY to SGD294m bringing 1H19 adjusted EBITDA to SGD624m, which represents 50% of our estimates. This was attributed to stronger VIP volumes and a higher win rate which helped offset the significant decline in mass gaming. Moving forward, we expect adjusted EBITDA to soften as win rate normalises and volume eases.


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Hongkong Land Holdings Ltd

Standing strong in Central


■ Extended average office lease expiry may cushion downside for office rents.

■ We think HKL’s application for plot ratio increase in its mega JV project with SHKP in Yuen Long could drive growth in the medium term.

■ We keep our Add call with a TP of US$7.4, based on 45% discount to NAV.


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