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CGS CIMB |
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DBS Group (DBS SP) Yielding results; U/G to BUY
Resilient results. High dividend visibility DBS’ 9M19 core earnings were well ahead of MKE/Street estimates due to higher non-interest income and better cost management. In our view, the group’s post GFC fundamental shift towards commercial banking from volatile universal banking is bearing fruit with a business mix that can effectively navigate regional uncertainty. Interest income, fees and trading all delivered despite a tough macro backdrop given the HK unrest, trade war and slowing Singapore. DBS’ dividends are on track to meet our expectations in 2019E. With CET1 at 13.8% - higher than the 13.5% management comfort level – it can also potentially surprise on the upside. Together with good dividend visibility in 2020E, we upgrade DBS to BUY with a higher TP of SGD29.92 following post-3Q19 changes (see below).
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ST Engineering Merits of diversification
■ We would have been spot on in our 3Q19 estimate of S$150m without the one-off S$14m Hornbeck claims. 9M at 70% of our and consensus FY19F. ■ Key highlights in 3Q19: 1) end of programme review in aero resulted in super profits in CERO and 2) commendable contract wins for aero and electronics. ■ Our blended TP is up to S$4.47. Buy on share price weakness. Catalysts: stronger MRAS and contracts wins; risks: global slowdown. Maintain Add.
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RHB |
CGS CIMB |
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Food Empire (FEH SP) Caffeine Rush; Keep BUY
Maintain BUY and SGD0.73 TP, implying 35% upside and c.2% yield. Food Empire recorded another strong quarter in 3Q19 with PATMI growing 34% YoY to USD7.9m. Excluding FX impact, 9M19 core PATMI of USD21.2m met 96% of our full-year estimate, exceeding our expectations.
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Sunningdale Tech Ltd Still challenging
■ We deem Sunningdale Tech 3Q19 core net profit to be in line at 70% of our full year forecast because it incurred S$0.3m net losses in 1H19. ■ Gross profit margin improved by 2.9% pts qoq to 12.5% in 3Q19 due to cost management, which was encouraging. ■ We maintain our Reduce call as we expect weak 4Q results still. Dividend yield of 6.30% will cushion the downside.
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Check out our compilation of Target Prices
