ANALYSTS SAY: Buy, Sell, Hold (4 Nov)

CGS CIMB

DBS Group Holdings Ltd
Higher net interest margin lift profits

SINGAPORE | BANKING| 3Q22 RESULTS
 3Q22 earnings of S$2.24bn in line with our estimates due to higher net interest income (NII) and net interest margins (NIM) slightly offset by lower fee income and higher allowances. 9M22 PATMI is 77% of our FY22e forecast. 3Q22 DPS up 9% YoY at 36 cents.
 NII surged 44% YoY to S$3bn on NIM expansion of 47bps to 1.90% and loan growth of 6% YoY. Fee income fell 13% YoY due to weaker market sentiment while other noninterest income increased 32% YoY. 3Q22 ROE increased 4.2% points YoY to 16.3%.

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Aztech Global Ltd
FY23F order book remains strong

■ Aztech reported a 3Q22 net profit of S$20.8m (+15.6% yoy, -28.3% qoq), in line with our S$21.1m forecast.
■ 3Q22 net profit was negatively impacted by a S$15.4m fair value loss on derivative financial instrument due to the weakening Rmb vs. US$.
■ Reiterate Add with unchanged TP of S$0.96, as FY23F order book remains strong. A surprise interim DPS of 3.0 Sct was declared.

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CGS CIMB

DBS Group
The repricing goes on

■ Management’s FY23F outlook is fairly optimistic, underpinned by sound asset quality (c.20bp SP) and continued repricing (2.25% NIM by mid-2023F).
■ Strong topline growth leading to ROE rising above c.15% in FY23F (from our estimated c.13.5% in FY22F) is a key re-rating catalyst.
■ Reiterate Add with a lower TP of S$38.75 as we raise our risk-free rate. DBS trades at c.1.3x FY23F P/BV, below its c.1.6x peak in the last rate hike cycle.

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Netlink NBN Trust
Built for the tough times

■ NLT’s 1H23 results were in line; core net profit/DPU at 52%/50% of our FY23F forecast. DPU growth reaccelerated to +2.3% yoy (1H23: 2.62 Scts).
■ Ancillary project revenue the key driver for 1H topline growth. NLT continued to see healthy connection growth across all three fibre connection segments.
■ ICO review likely to only be completed in 1HCY23. Reiterate Add with lower TP of S$0.92 on higher cost of equity assumptions. 

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Aztech Global (AZTECH SP)
3Q22: Earnings In Line With Expectation; Orderbook Remains Solid

Aztech’s 3Q22 net profit of S$21m (+16% yoy/-28% qoq) is in line with our forecast despite a fair value loss on a derivative financial instrument of S$15m. IoT devices continued to be a key growth driver, driving revenue growth of 55% yoy. Orderbook fell 0.8% to S$820.5m as at 3 Nov 22 vs S$827m as at 25 Jul 22; S$210m is planned for completion in 4Q22, which indicates stability in its orders and 2023 revenue. Maintain BUY with a 6% higher target price of S$1.05.

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DBS Group Holdings (DBS SP)
3Q22: Higher NIM And Lower CIR Pushing ROE Higher

DBS achieved record high net profit of S$2,236m (+32% yoy) in 3Q22. While NIM has expanded by a massive 47bp yoy, management has understandably toned down guidance on NIM expansion due to migration to fixed deposits. Asset quality has improved with NPL ratio at 1.2% and management overlay for general provisions at S$2.1b as of end-Sep 22. ROE would be comfortably above 15% in 2023. DBS will review its dividend policy to hike DPS in 2023. Maintain BUY. Target price: S$45.00. 

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