ANALYSTS SAY: Buy, Sell, Hold (14 Feb)

UOB KAYHIAN

DBS Group Holdings (DBS SP)
4Q22: Striving To Reach Targeted Net Profit Of S$10b

DBS achieved net profit of S$2,341m (+69% yoy) in 4Q22. NIM expanded 15bp qoq, while net interest income grew 53% yoy. Asset quality improved with NPL ratio easing 0.1ppt qoq to 1.2% and ample management overlay for general provisions of S$2b. Management expects cost-to-income ratio to fall below 40% in 2023. DBS increased quarterly DPS by 17% to 42 S cents and rewarded shareholders with a special dividend of 50 S cents. Maintain BUY. Target price: S$45.80.

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SATS (SATS SP)
3QFY23: Core Profitability A Slight Miss; Awaiting Completion Of WFS Deal

Excluding government relief and one-off acquisition-related expenses, SATS’ 3QFY23 core net losses stood at S$2m-4m in 2QFY23. Despite some qoq improvement, 3QFY23 core profitability was still slightly behind our projection, due to faster-than-expected cost ramp-up in preparation of the traffic volume recovery from China. Results aside, the market is awaiting SATS’ closure of the WFS acquisition, which is on track to be completed by Mar/Apr 23. Maintain BUY with a target price of S$3.28. 

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CGS CIMB

DBS Group
Stabilising NIMs; waiting on wealth

■ We see NIMs stabilising in FY23F as funding cost pressures remain.
■ FY23F credit costs could remain historically low (mgmt. guides for 10-15 bp), but the lagged impact of the higher rate environment is yet to be seen.
■ Reiterate Hold with lower TP of S$35.70. We think NIM upside from further rate hikes are priced in at this stage. Wealth upside could take time

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SATS Ltd
A gradual recovery despite higher costs

■ 3QFY3/23F net profit of S$0.5m was below our/consensus’ estimates of S$12.2m/S$19.2m on slower revenue momentum and higher costs.
■ Earnings recovery intact, but pick-up likely gradual over next two quarters.
■ Reiterate Add with unchanged TP of S$3.21, based on DCF (WACC: 7.7%) valuation due to improved cash generation of SATS-WFS.

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VS Industry (VSI MK)
Softness Sufficiently Priced In; Still Seeing Growth In 2023

While we cut FY23 earnings by 19% in view of the prolonged demand softening in the consumer electronics segment, we believe the weak prospects have been sufficiently priced in. Meanwhile, main customers’ order rechannelling is cushioning the shortfall while the much-needed drivers are in place to fuel VS’ growth in 2H23. VS is still the frontrunner of the US-China trade diversion, with key customers committed to supply chain reconfiguration. Maintain BUY with a lower target price of RM1.20. 

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Paragon REIT
Awaiting more catalysts

■ 16MFY22 DPU of 7.24 Scts (+1.7%) was in line at 102.7% of our 16MFY22F.
■ 16MFY22 portfolio reversions narrowed to -4.1% (FY21: -10.8%). Tenant sales at all malls recovered to pre-Covid-19 levels or higher.
■ We believe recovery is priced in. Stay Hold, with a higher TP of S$1.01.

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