Singapore Banks are likely to post single digit earnings growth this year. Non-interest income would be the key driver for banks to deliver 'above-expectations' results as net interest margin (NIM) is still likely to slip further and provisions to level up. Therefore we are only forecasting 3% earnings growth in 2013. Despite softer earnings growth, Singapore banks' balance sheets are strong. We see minimal risk to asset quality while capital will remain strong. However, there is upside to our forecast if the provision charge-off rate decline and loans growth improved. We are forecasting 8% loan growth for 2013, still largely driven by business loans. In terms of stock pick, we prefer OCBC (BUY, TP: S$11.50 (Prev. S$10.70)) over UOB (HOLD, TP: S$20.10 (Prev S$ 19.70)).

Hutchison Port Holdings Trust is acquiring 100% stake in Asia Container Terminal Holdings (ACT) for US$505m, to be fully funded by debt. Net gearing will inch up from 0.34x to 0.42x with this transaction, still well within reasonable limits. ACT owns 2 berths in Kwai Tsing Port, Hong Kong and handled 1m TEUs in 2012. This acquisition will raise HPHT's market share in HK to 57%, and provide revenue and cost synergies. FY13/14F DPU raised by 3%/5%, assuming 4% cost of debt. Maintain BUY with higher TP of US$0.89 (Prev US$ 0.85).

We are upgrading HongKong Land to BUY, target price revised up to US$8.12 (Prev US$ 7.93). HKL reported stronger-than-expected contributions from residential sales in FY12. The group is also stepping up its regional residential investments. HKL should benefit from our expected bottoming out of the Central office market. Continued new ventures in different Asian cities and real estate sectors should not only add growth impetus to the company but also diversify its earnings profile. Overall, HKL is evolving as a regional property play which should justify a higher valuation over the long term.

ThaiBev will be added to the STI on March 18 and IHH Healthcare, which has been on the STI for just six months, will be removed. If F&N is taken private before the next review, it will be replaced by the counter on the reserve list with the highest market value. The reserve stocks are Hutchison Port Holdings Trust, Keppel Land, Ascendas Real Estate Investment Trust, UOL Group and CapitaCommercial Trust. The next review will be on June 6. The Mid Cap index, a basket of the 31st to 80th largest companies by market value, will see Far East Hospitality Trust, Fortune Real Estate Investment Trust and United Engineers replacing CAO, Hong Leong Asia and Pacific Andes Resources Development.

Sitra Holdings is placing 75m new shares at an issue price of S$0.0428 per share to raise S$3.2m. The issue price is about 10% discount to the last weighted average price. The proceeds will be used for repayment of bank borrowings, trade and other payables, and for working capital purposes.

Source: DBSV