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DBS Group (DBS SP)

On track to deliver in 2019E


4Q18 in line, supported by rising NIM, lower NPLs

Core 2018 earnings were in line with MKE and Street expectations with 4Q18 earnings rising 8.3% YoY. Higher NIM (+9bps YoY) and loan growth (+6.7% YoY) were key drivers that will continue to push earnings momentum in 2019E. Higher costs surprised us and this pressure is likely to remain from regional expansion and integration efforts. We have lowered FY19/20E core net profit by 4% (Fig. 2) and marginally reduced our multi-stage DDM TP to SGD29.56 (COE 10.3%, 3% terminal), which still offers 17% upside. Maintain BUY on our top sector pick. Deterioration of asset quality remains a key risk.


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Singapore Strategy

Singapore budget 2019


■ Our impression of the 2019 Singapore budget is non-radical. The further tightening of foreign labour policies is not materially negative, cushioned by automation grants.

■ There was no sugar tax or details on e-commerce tax as expected by consensus.

■ Stocks with positive implications: STE on more spending in physical and cyber defence; CD could indirectly benefit from higher excise diesel duty.


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Mapletree Industrial Trust: Finalising funding options for 18 Tai Seng Street 


Mapletree Industrial Trust (MIT) has received in-principle approval from SGX-ST for its private placement exercise to raise S$201m in gross proceeds with the issuance of 103.36m new units at an issue price of S$1.945. The bulk of the proceeds would be used to partly finance the acquisition of 18 Tai Seng Street (total acquisition outlay of S$271.0m). While we are not surprised at this equity fund raising exercise, we had previously assumed full debt financing for the acquisition. Hence, we now update our projections in accordance to the finalised funding details. After trimming our FY19 and FY20 DPU forecasts by 1.2% and 2.9%, respectively, we derive a lower fair value estimate of S$1.98 (previously S$2.04).

Healthcare and Defence stocks are Budget winners


• 2019 expansionary budget focuses on security, companies’ competitiveness and building a caring and inclusive society

• Muted stock market effects but interesting to watch for upcoming developments by various ministries

• Market to refocus on US-China trade deal and results season

• Base-case STI objective of 3,250 at mid-year; bull case of 3,500 by year-end


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LionelLim8.16Check out our compilation of Target Prices

Share Prices

Counter NameLastChange
AEM Holdings0.930-0.035
Alliance Mineral0.186-0.004
Anchor Resources0.011-0.001
Avi-Tech Electronics0.2800.015
Best World Int.1.360-
China Sunsine1.1400.020
CSE Global0.490-
Food Empire0.520-
Geo Energy0.151-
Golden Energy0.210-0.005
GSS Energy0.080-0.001
ISDN Holdings0.220-
KSH Holdings0.490-0.005
Moya Asia0.078-
Nordic Group0.285-0.005
Oxley Holdings0.300-0.005
REX International0.068-0.002
Sing Holdings0.385-0.005
Sino Grandness0.0580.001
Straco Corp.0.760-0.015
Sunningdale Tech1.3000.010
Sunpower Group0.460-0.015
The Trendlines0.081-0.002
Tiong Seng0.220-
Uni-Asia Group1.1500.050
XMH Holdings0.180-
Yangzijiang Shipbldg1.440-0.030

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