Brokers' take

Compiled by Jamie Lee, The Business Times

SINGAPORE PROPERTY


OCBC INVESTMENT RESEARCH, MARCH 13

The Singapore authorities announced last Friday that they have relaxed some property cooling measures. On balance, we believe these set of changes will be marginally supportive of still-declining home prices. In our view, the timing of these reversals was not a complete surprise.

As we have been highlighting to our clients over the last few months, the Singapore government has over the last three cycles a near unbroken record of actively reviewing property legislations against its goals of price stability, and historically began reversing curbs after homes prices had dipped between 8 per cent and 17 per cent from the peak.

SINGAPORE BANKS


RHB SECURITIES RESEARCH, MARCH 13

While the property-cooling measure tweaks are minor, in our view, the benefits to the three banks will vary as their exposure to property loans differ a fair bit. OCBC and UOB's exposure to housing loans stands at 27 per cent each, whilst DBS's is a lower 21 per cent. UOB has the highest percentage exposure to building & construction loans at 23 per cent. All three banks recorded Q4 2016 low single-digit housing loans and building and construction loans sequentially.

Our view is UOB will be the key beneficiary as it has the largest exposure to property-related loans. We also like UOB for its higher general provisioning to loan ratio, which provides scope for write-back of general provisions in the quarters ahead. UOB is our only buy recommendation within the Singapore banking space.

DEL MONTE PACIFIC | HOLD

TARGET PRICE: S$0.36

MARCH 13 CLOSE: S$0.345


DBS GROUP RESEARCH, MARCH 13

While its Asia-Pacific operations are posting strong growth, we believe firmer performance from its US operations (DMFI) and the fruition of its deleveraging plans are keys to the re-rating of the counter.

The main proposition of our recommendation is the turnaround of profit in the absence of non-recurring expenses and better operational performance. The recurring operating profit was behind our expectations largely arising from a weaker-than-expected performance from DMFI.

Del Monte Pacific Ltd's (DMPL) Q3 2017 core earnings were within expectations, helped by tax credits. DMPL's planned issuance of an initial US$250 million tranche of perpetual preference shares has received approval from the relevant authorities. The launch is projected to be in March or April 2017. We estimate this to lower the group's gearing to 2.2 times by end-FY2018F.

Disclaimer: All analyses, recommendations and other information herein are published for general information. Readers should not rely solely on the information published and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.