| MAYBANK KIM ENG |
RHB |
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Singapore Banks Value in the time of Corona
Despite deep cuts, SG banks offer value Singapore banks have de-rated 26% YTD. In view of the escalating Covid19 pandemic, we have lowered sector 2020-2022E PAT by 11-14%. We expect a rapid rise in NPLs and credit charges may surpass levels seen during the 2017 O&M crisis. However, unlike past crises, these banks are starting with strong capital ratios, high provisioning levels and wider geographic diversity. Unprecedented, coordinated fiscal and monetary stimulus efforts by governments focused on liquidity support should also provide downside support, in our view. Importantly, the sector offers some of the highest and most visible dividend yields regionally. As a result, we believe Singapore banks currently offer substantial value. Our order of preference is OCBC (upgraded to BUY), UOB and DBS.
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ESR-REIT (EREIT SP) Is This The Bottom?
Maintain BUY with new TP of SGD0.50, from SGD0.60, +61% upside plus 13% yield. ESR-REIT’s share price has tumbled 43% over last one month (vs S-REITs -30%) amidst a global market sell-off. Despite overall market gloom, we see its two key strengths ie pure-play exposure to the Singapore industrial sector (which has remained resilient through market cycles), and supportive/capable sponsor. While near term share price movement remains unpredictable, we see its value emerging at 0.7x P/BV
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| PHILLIP SECURITIES | CGS CIMB |
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Singapore Banking Strategy Cheaper than during Global Financial Crisis
SINGAPORE | BANKING & FINANCE | UPDATE Selling pressure drove prices of banking stocks below Global Financial Crisis (GFC) low Price-to-Book (P/B) ratios. Even under stressed scenario, banks can meet their dividend payout. Last dividend cut was during the 2008 GFC when Tier-1 capital ratio was 12.0% vs 15.3% currently (before CET-1 was introduced). Bank stocks now trading at above 6.5% dividend yield. Maintain Singapore Banking Sector at Overweight. Recent price weakness presents an opportune time for investors to enter with an attractive yield.
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AEM Holdings Ltd Delays ≠ cancellations
■ We believe AEM has shut down its factory for now as the MCO kicks in; it is liaising with authorities to work out solutions to remain in production. ■ We think the worse-case could be delivery delays for AEM but acknowledge risks to the additional S$20m orders we are currently expecting in FY20F. ■ Reiterate Add and TP of S$2.71.
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Check out our compilation of Target Prices
