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Banking – Singapore Higher Bond Yields Are Here To Stay
We expect government bond yields to remain firm with an upward bias, supported by recovery in economic growth driven by fiscal stimulus and COVID-19 vaccinations. Higher bond yield is positive for banks as it foreshadows higher future interest rates. DBS and OCBC have strong CET-1 CAR of 13.9% and 15.2% respectively. We expect DBS (BUY/Target: S$30.30) and OCBC (BUY/Target: S$14.68) to provide dividend yield of 3.9% and 4.3% for 2021 and 4.7% and 4.8% for 2022. Maintain OVERWEIGHT
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UMS Holdings (UMSH SP) High Precision Semiconductor Play
UMS is a pure semiconductor play with exposure to the leading Endura platform by AMAT. The swift rebound post COVID-19 lockdowns in 2Q20 has shown strong underlying demand, and rational competition is expected due to elevated capacity utilisation rates across the semiconductor industry. Current valuations are attractive given UMS’ sticky positioning within the sector. Initiate coverage with BUY and target price of S$1.65.
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CGS CIMB |
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Hongkong Land Holdings Ltd More China DP projects ahead
■ Weak property sales recognition dragged HKL’s underlying profit down 11% yoy in FY20. ■ Management expects negative office rental reversion in 1H21F. It, however, believes the “work-from-home” trend will not impact demand for prime office. ■ It will likely expand its DP land bank in China, as management claims it has enjoyed a short payback period and a more predictable profit margin there. ■ Reiterate Add with a higher TP of US$5.7 (45% discount to NAV).
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