Brokers' take

Compiled by Stephanie Luo

DBS GROUP HOLDINGS | HOLD

TARGET PRICE: $22.50

AUG 7 CLOSE: $21.15

Jefferies Singapore, Aug 7

Q2 earnings grew 8 per cent YoY (year on year) underpinned by broad-based loan growth and fee income.

It was partly offset by flat margins from lower Singdollar interbank rates and weaker trading performance. Asset quality guidance is for continued weakness. Cost discipline is unchanged.

Dividend is up 10 per cent on the back of consistent financial performance and strong capital position (common equity tier 1 14 per cent), though payout ratio run rate remains below 40 per cent.

Outlook remains for a mid-single loan growth with an upward bias. While medium-term outlook is attractive, share price may be capped in near term due to uncertainty in interbank rates and asset quality.

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UOL GROUP | ADD

TARGET PRICE: $9.03

AUG 7 CLOSE: $8.16

CIMB Research, Aug 7

UOL reported a Q2 2017 net profit of $109.4 million, +59 per cent year on year, in line with our expectations.

Stripping out fair-value gains, core net profit was $100 million, +11 per cent year on year. The improvement was due to higher associate contributions from UIC and better property development income.

Q2 residential development revenue rose 19 per cent year on year to $221.2 million, thanks to better contributions from Principal Garden.

We continue to like UOL for its diversified business model with strong cash-flow generation. Its debt-to-equity ratio is healthy at 24 per cent, which puts the group in a strong position to deploy capital for growth.

Downside risks include a slower-than-expected residential market recovery or cap rate expansion.

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SINGAPORE POST | HOLD

TARGET PRICE: $1.37

AUG 7 CLOSE: $1.31

UOB Kay Hian, Aug 7

Singapore Post's (SingPost) Q1 FY2018 underlying net profit (-25 per cent year on year) was within our expectation. Earnings were impacted by lower domestic mail volumes, increased competition in the logistics segment and costs from planned investments.

We believe SingPost will still be in the transformational phase over the next few quarters, where the declining postal segment has yet to be mitigated by a ramp-up in the e-commerce logistics network.

While we remain positive on SingPost's long-term prospects, we believe near-term earnings will continue to be hampered by transformation costs.

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