Compiled by Angela Tan
UNITED OVERSEAS BANK (UOB) | BUY
MAY 3 CLOSE: $29.58
TARGET PRICE: $33.20
DBS, May 3
UOB continues to be optimistic about FY18's outlook and has guided for high single-digit loan growth (we have assumed 8 per cent), net interest margin to continue to track higher with visibly higher rates ahead, and credit costs guided at 20-25 basis points, possibly at the lower end.
UOB's full year dividend of $1.00 per share is here to stay. Possible upside to higher dividends would not be discounted.
There might be special dividends along the way. Although scrip dividends will prevail, the shares would be issued without a discount.
UOB hinted at a likelihood of attaining 12 per cent return on equity (1Q17: 11.0 per cent) over these two years on the back of sustained net interest margin uplift (another 1-2 basis points each quarter ahead), further improvements in cost management and higher dividends.
CITYNEON HOLDINGS | BUY MAY 3 CLOSE: $1.04
TARGET PRICE: $1.60
DBS, May 3
The acquisition of The Hunger Games - The Exhibition Intellectual Property rights (IP) comes with the right to acquire other IPs owned by Lionsgate. With this latest deal, Cityneon is now on a stronger and firmer growth path.
Together with the three existing IPs - Avengers, Transformers and Jurassic World - plus its traditional business, we continue to expect Cityneon to deliver explosive FY16-19F earnings per share compound annual growth rate of 172 per cent.
Trading at a low PE-to-growth ratio of just 0.2x forecast FY18 earnings, Cityneon is attractive to investors seeking unique ideas in the entertainment industry.
Potential catalysts are mergers and acquisitions, acquiring more IPs, expanding project pipeline, focus on higher-margin projects for the traditional business.
OUE HOSPITALITY TRUST | BUY
MAY 3 CLOSE: $0.81
TARGET PRICE: $0.95
RHB, May 3
OUEHT posted a strong all-round performance, with healthy revenue per available room growth for its hotels and a higher occupancy rate at its retail mall.
We expect this trend to continue in 2018, with the limited supply of new hotels and continued momentum in visitor demand.
Corporate demand is also expected to trend higher, on the back of more MICE events and a positive economic growth outlook.
With borrowing costs inching higher, OUEHT's refinancing of all its debts at the beginning of the year has proven timely.
Dividend yields are compelling, with FY18F-19F dividend yields at 6.5 per cent and 7 per cent, respectively.
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