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UOB KAYHIAN |
UOB KAYHIAN |
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Banking A Reformer Bent On Downsizing The Fed’s Balance Sheet
Highlights • We see “benign” rate hikes, which are likely to be short-lived, given that inflation is caused by Middle East conflicts and, therefore, transitory. Inflation is expected to taper off in 2027, aided by correction in prices of crude oil. • The task force on the size of the Fed’s balance sheet could recommend restarting quantitative tightening in 2027. This would lead to higher bond yields, which is a favourable outcome for banks. • The cessation of reciprocal tariffs and hostilities in the Middle East paves the way for continued economic expansion. Our top pick is OCBC (BUY/Target: S$29.70) for its strategic shift to accelerate growth. We also like DBS (BUY/Target: S$72.50) for its attractive 2026 dividend yield of 5.0%. Maintain OVERWEIGHT on the sector.
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Trip.com (9961 HK) 1Q26: Resilient Top-line Growth; 2Q26 Guidance Below Expectations
Highlights • Trip.com reported mixed 1Q26 results, with revenue broadly in line with our and the street’s expectations, while profitability came in below the street’s estimates. Total net revenue rose 17% yoy to Rmb16.2b. Non-GAAP net income declined 6.8% yoy to Rmb3.9b, in line with our expectation but missing consensus estimate by 7%, while non-GAAP net margin expanded 3.8ppt yoy to 31.2%. TCOM guided for 2Q26 total net revenue growth to decelerate to 3- 8% yoy, with the midpoint implying a 9-10% miss vs consensus expectation. • Maintain BUY with a lower target price of HK$475.00 (US$53.00).
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| MAYBANK SECURITIES | MAYBANK SECURITIES |
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OUE REIT (OUEREIT SP) Paving the way for fresh blood Divestment of Crowne Plaza Changi
OUE REIT said it divested Crowne Plaza Changi Airport (CPC) for SGD500m at a 1.3% premium to its appraised value ahead of expiry of its hotel management and master lease agreements in 2028. Net proceeds will be deployed to debt repayment, acquisitions, asset enhancement initiatives and capital management, alongside SGD20m of special distributions in the next two years. We keep our FY26E forecasts unchanged as the acquisition is likely to complete in 4Q26. Our DDM-based TP of SGD0.45 is maintained with BUY.
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Merdeka Copper (MDKA IJ) Solid inflection
Maintain BUY with a higher TP We maintain our BUY call on MDKA with a higher SOTP-based TP of IDR3,800 as we revise up our long term copper prices. We believe FY26E marks an earnings growth inflection point for MDKA: With Pani delivering first gold in 1Q26, group gold output steps up materially and the P&L swings from a FY25A loss to a FY26E profit. Elevated copper prices and a higher long-run copper deck underpin the uplift in our TB Copper valuation.
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| DBS GROUP | |
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SINGAPORE TELECOMMUNICATIONS
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