Compiled by Kenneth Lim
The Business Times
EZION HOLDINGS | ADD
TARGET PRICE: $0.44
FEB 19 CLOSE: $0.35
CIMB Research, Feb 19
Ezion expects to report a net loss for Q4 FY16 and full-year FY16 due to possible impairments for its assets. Impairments of at least US$45 million (S$64 million) to US$50 million are implied.
The news is not a huge surprise to us and the impairment exercise, subject to quantum, could help to remove overhang on the stock. Focus for Q4 FY16 results will be on chartering prospects and the impact of consolidating Swissco's 50 per cent joint venture portion in 2017. Nonetheless, a knee-jerk negative share price reaction is expected, given that this will be the first time Ezion reports a full-year loss.
We maintain our call pending results announcement on Feb 23.
UNITED OVERSEAS BANK | BUY
TARGET PRICE: $22.70
FEB 20 CLOSE: $21.11
DBS Group Research, Feb 20
Worst could be over for United Overseas Bank (UOB), upgrade to "buy". Of its peers, UOB stood out with asset quality prospects appearing more optimistic. Credit cost should normalise to 32 basis points in FY17.
UOB remains the best buffered in terms of general provision reserves despite reversing a good chunk to offset higher specific provisions in FY16.
New non-performing loans (NPL) formation should ease from here while NPL ratios are expected to hover around the 1.5 per cent to 1.6 per cent range in FY17. Management said its small- and medium-sized enterprise (SME) exposures have been resilient and are diversified; SME loans are approximately 20 per cent of total loans.
Management believes the Fed rate hike impact pass-through would lag the Singapore Interbank Offered Rate (Sibor) movements, hence, expectations of a later rise in net interest margin; more apparent in H2 2017.
Asset quality improvements should be the key catalyst for the stock when compared to its peers. Management's positive stance could provide a share price uplift in the near term.
UNITED OVERSEAS BANK | REDUCE
TARGET PRICE: $18.92
FEB 20 CLOSE: $21.11
Phillip Securities Research, Feb 20
Q4 FY16 Patmi of $739 million missed our Q4 2016 estimate of $786 million by 6 per cent. Surprise came from lower than expected net trading income and net gain from investment securities in Q4 2016. And a slight quarter-on-quarter growth of 3.7 per cent in net interest income was in line with our expectations.
Maintain "reduce" with a lower target price of $18.92 (previously $18.97) pegged at unchanged 0.95 times FY17 forecast price-to-book ratio (excluding preference shares).
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