Compiled by Claire Huang
OCBC BANK | NEUTRAL
PHILLIP SECURITIES RESEARCH, JULY 28
JULY 28 CLOSE: $11.39
TARGET PRICE: $10.81
We are revising our loan-to-deposits ratio (LDR) forecast for OCBC from about 80 per cent to about 85 per cent as management indicated more flexibility to move the LDR higher.
We thus increased our FY17E net interest income growth estimates from our previous 2 per cent to 5 per cent.
With rising economic sentiment and low volatility at the start of 2017 and the recovering housing market, we are revising our valuation to reflect these improvements. But we are cautious about OCBC's sensitivity to competition in the loans market; slightly more than half of its loans are pegged to board rates.
Upgrade "neutral" with a higher target price of $10.81.
SEMBCORP MARINE | BUY
OCBC INVESTMENT RESEARCH, JULY 28
JULY 28 CLOSE: $1.695
TARGET PRICE: $1.98
Sembcorp Marine (SMM) saw a 27.8 per cent year-on-year drop in revenue to $655.5 million and a 51.2 per cent fall in net profit to $5.6 million in Q2-17, dragged by foreign exchange losses of $34.4 million in the quarter.
Quarter on quarter, revenue was 14 per cent lower; estimated core net profit was higher at $39.6 million in Q2-17, versus a core net loss of $3.6 million in Q1-17.
Transocean has asked SMM to resume work on its two drillships, and has paid another 5 per cent on both.
Potential customers have emerged for technically completed, accepted rigs but whose deliveries have been deferred.
The group has declared an interim dividend of $0.01/share, versus $0.015/share last year.
YOMA STRATEGIC HOLDINGS | BUY
RHB RESEARCH, JULY 27
JULY 28 CLOSE: $0.585
TARGET PRICE: $0.78
Revenue growth coupled with margin expansion led to the impressive performance in Q1 FY18 (March). Favourable macroeconomic factors are spurring the growth in the non-real estate businesses.
A sign of positivity in the real estate market is observed through a growth in revenue.
With the on-going capital recycling, we expect positive outcome in the coming years. We maintain our "buy" recommendation with an unchanged sum-of-parts-based target price of $0.78 (32 per cent upside).
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