Compiled by Stephanie Luo, The Business Times
DBS GROUP HOLDINGS | BUY
TARGET PRICE: $24.48
OCT 20 CLOSE: $21.84
UOB Kay Hian, Oct 20
We expect DBS Group Holdings' loan growth to have accelerated to 2.5 per cent quarter-on-quarter in Q3 17. Consolidation of ANZ's wealth management and retail banking businesses here and in Hong Kong would boost loan growth to 7.1 per cent year-on-year (yoy) and fee income growth to 6.7 per cent yoy in Q3 17.
We expect the consolidation of ANZ's wealth management and retail banking businesses to pressure net interest margin due to the addition of low-margin loans for high-net-worth clients, and lower loan/deposit ratio to 87.9 per cent.
We expect robust contributions from investment banking, with the completion of the initial public offering of NetLink NBN Trust.
SINGAPORE MEDICAL GROUP | BUY
TARGET PRICE: $0.78
OCT 20 CLOSE: $0.62
Maybank Kim Eng Research, Oct 20
SMG will acquire its third paediatric clinic for $7.9 million. The deal valuation is 7.9x price-to-earnings, based on FY16 earnings of $1 million.
SMG, expanding organically, will recruit four specialists by Q1 18. Its growth strategy could ensure better long-term sustainable earnings.
We raised FY18/19E earnings per share (EPS) by 0 per cent/2 per cent for earnings contribution from the acquisition, offset by operating costs from recruiting the specialists.
We see a minor dilution of 1.4 per cent. We have not factored in future acquisitions. Every $1 million profit acquisition could raise FY 17E EPS and target price by at least 7 per cent. Acquisition of women's health group is SMG's largest and integrating the business might require more resources.
CHINA EVERBRIGHT WATER LIMITED | BUY
TARGET PRICE: $0.54
OCT 20 CLOSE: $0.47
Phillip Securities Research (Singapore), Oct 20
The trend is in projects awarded to be larger and more integrated in nature.
This favours large operators such as China Everbright Water. As at Oct 17, it had 73 projects, with 21 more in the pipeline. We revised down our FY17 EPS forecast from 3.6 cents to 3.4 cents due to foreign exchange changes.
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