| RHB |
MAYBANK KIM ENG |
|
Oversea-Chinese Banking Corp (OCBC SP) Softer NIM And Possible M&A To Limit Upside
Maintain NEUTRAL with unchanged SGD11.50 TP, 7% upside, 4.6% yield, based on 1.07x 2020F P/BV. The US Federal Reserve cut the federal funds rate (FFR) at the mid-September FOMC meeting. Going forward, more cuts are expected. Given the historical positive correlation between the US FFR and 3-month SIBOR, we expect further softness in the latter. This is negative for the NIMs of the three Singapore banks. Market talk of OCBC’s interest in buying Bank Permata may also cap OCBC’s share price. Our Top Pick is UOB.
|
Singapore Banks Rolling with the “In-crowd” “
Premiumization” of clients may lower NPL risks The Singapore banks have been actively lowering risk in their business mix with increasing focus on retail/wealth management, while largely limiting wholesale exposure to large corporates and larger SMEs. While this may not make them immune to asset quality risks heading in to a downturn, it should provide some cushioning together with the ability to better manage these risks. Despite an 8bps YoY credit charge increase that we forecast for 2020E, the sector is set to deliver a dividend yield of 5.2% - amongst the highest in the region. UOB is our top pick.
|
|
CGS CIMB |
UOB KAYHIAN |
|
Venture Corporation Key customer launches new product
■ A key customer, Philip Morris International (PM), has launched its new product, IQOS 3 DUO. ■ PM may launch another product (IQOS MESH) within 2H19. ■ Maintain Add on Venture. We expect the 3Q19 results (we forecast a S$90.4m core net profit, +11.9% yoy, -0.4% qoq) on 8 Nov.
|
Singapore Telecommunications (ST SP) Cautious Near-term Outlook, Downside Supported By Attractive Dividend Yield
Singtel will defend its market leadership position in the consumer space while driving high single-digit EBITDA growth for FY20. The overhang from TPG appears fairly muted at this stage given incumbents’ grip on premium customers and the proliferation of MVNOs to address value customers. All in all, we foresee a 9% yoy earnings contraction for FY20, given competition in the consumer space and weak enterprise revenue. Maintain HOLD with a target price of S$3.32. Entry price: S$3.00.
|
Check out our compilation of Target Prices
