buy sell hold 2021



Banking – Singapore
1Q23 Results Preview: NIM Has Plateaued

DBS’ and OCBC’s net interest income grew by a massive 54% and 57% yoy respectively but the pace of NIM expansion has started to moderate and plateau. Asset quality remains benign. We forecast net profit of S$2,446m for DBS (+36% yoy but +4% qoq) and S$1,706m for OCBC (+26% yoy and +31% qoq). Our top pick is OCBC (BUY/Target: S$16.80), followed by DBS (BUY/Target: S$41.80). OCBC provides attractive 2023 dividend yield of 5.8%. Maintain OVERWEIGHT. 


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Consumer – China
Periodical Opportunities Ahead; Confident On Professional Sportswear Products Expansion

We expect to see periodical opportunities in the following months due to the slow pace of consumption recovery and lack of incremental funds. We suggest paying more attention when the share prices dip to a low level that is close to the bottoms in Apr/Oct-Nov 22. We are confident on domestic sportswear leaders’ future growth from the increasing demand for professional sports products against the partially recovered purchasing power. Maintain OVERWEIGHT on the consumer sector.


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Westports Holdings (WPRTS MK)
Beneficiary Of China’s Recovery; WPRTS 2 Concession Looms

We see opportunities for investors to accumulate on trading upside, premised on a changing market perception about China’s reopening (and a reportedly sharp drop in the number of empty containers in China). That said, long-term upside will remain capped until the terms of the WPRTS 2 concession (slated to begin construction in 2H23) are known. Pulau Carey will not be a competition for the next 10 years. Retain forecasts, maintain HOLD and target price of RM3.80 (which does not assume new concession). 


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Junior mining sector
Critical minerals under the spotlight in 2023

Transition metals (incl. Cu, Ni, Li & REEs) and critical minerals remain key in 2023. Buoyant metal prices and a robust long-term outlook for critical minerals support a steady flow of investment into the junior mining sector this year. We expect that raw material supply will be the limiting factor.


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The Business Times reported that Singapore’s Land Transport Authority (LTA) had awarded a S$200 million contract to the Urban Solutions business segment of ST Engineering (S$3.62, down 1 cent) to work on two key systems for the Cross Island Line. On Friday (Apr 14), LTA announced that Urban Solutions will design and build the integrated supervisory control system for the Cross Island Line.


At $3.62, market cap of ST Engineering is S$11,244.8mln, FY23F P/E is 19.4x, current P/B is 4.7x, dividend yield is 4.4% and its net debt of S$5.93bln (as of end-4Q22) equates to net gearing of 247%. Given that we are expecting earnings growth for ST Engineering during this year, we thus recommend ACCUMULATE for the stock as we are forecasting FY23 net profit of ST Engineering to increase by 8.3% yoy to hit S$579.5mln.






1Q23F: Dry powder from wealth

■ We expect mixed NIM performance in 1Q23F given escalating funding costs.
■ Singapore banks are likely beneficiaries of strong wealth inflows in 1Q23F, but the return of risk-on sentiment will likely depend on the Fed rate outlook.
■ Reiterate Neutral. We think that management outlook on overall growth and asset quality will be key in driving share price movement. 


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