Towards Financial Freedom
DBS Equity Research: Wired Daily 17 Feb 2016
Today's Focus
- UOB - Results in line; Maintain HOLD, TP lowered to S$18.80
- OCBC - FY15 results above consensus but in line with our expectations
UOB's 4Q/FY15 earnings in line; higher NIM, moderate loan growth, higher provisions were key features. Total oil & gas exposure is at 4% of total loans; of which 20% is deemed vulnerable. Our FY16-17F earnings are trimmed by 3-4% on slower loan growth and flat NIM. We have already imputed higher credit costs. Maintain HOLD, TP lowered to S$18.80 (Prev S$19.20).
OCBC results out this morning. 4Q15 net profit jumped 21% y-o-y, above consensus but in line with our expectations. For the full year 2015, net profit was S$3.90bn. Excluding a one-off gain of S$391m in FY2014, core net profit after tax rose 13% to a new record, underpinned by higher net interest income, fee and commission income growth, as well as improved trading and investment income.
StarHub's 4Q15 net profit of S$80.8m (-14% y-o-y,-32% qo- q) was 5% below our expectations due to lower mobile revenue and higher cost of services. StarHub is guiding for slightly lower EBITDA margins in FY16 due to drop in adoption grant. The Group expects to pay 20.0-Sct DPS for FY16, unchanged, implying 5.3% yield. We maintain Fully Valued on StarHub with TP of S$3.30. We prefer M1 to StarHub. In case of non-entry of 4th telco, we see 27% upside at M1 versus 8% at StarHub.
FY15 results for Overseas Education in line. We expect enrolment to remain stable in FY16, while its new campus is expected to fetch higher tuition fees. FY16-17F earnings cut by 22%- 25% after imputing lower enrolment and higher costs. Maintain HOLD, TP cut to S$0.56.
The massive impairments/provisions in 4Q drags Cosco Corp's FY15 into a huge loss of S$570m. Cosco is expected to remain in the red for the next 2 years. Net gearing of 3.7x is a concern. Maintain FULLY VALUED with a reduced TP of S$0.24.
Mermaid's subsea orderbook has declined sharply from a high of US$473m at end- FY14 to US$212m as of end-3Q15. Subsea revenues and profits are likely to fall steeply in FY16/17. Downgrade to FULLY VALUED; TP is revised down to S$0.09 (0.2x FY16F P/BV).
SIA Engineering (SIAEC) will be signing an agreement with Airbus to form a joint venture based in Singapore, which will provide airframe maintenance, cabin upgrade and modification services for Airbus A380, A350 and A330 aircraft to airlines in Asia-Pacific and beyond. This joint venture marks SIAEC's first collaboration with a major aircraft manufacturer for airframe maintenance. Under the agreement, SIAEC will hold a 65% equity stake in the joint venture, with Airbus holding the remaining 35%.
Sunpower Group has secured the tender and received a letter of acceptance from SINOPEC Engineering Incorporation to supply flare systems. This will be the first flare system supplied by the Group to LNG field. This project will have a positive impact on the Group's FY2016 results. Sunpower Group is poised to capture global market with endorsement by international oil and gas giant.
Soo Kee Group plans to invest up to S$0.8m in a 70-30 joint venture (JV) to engage in bullion business involving precious metals. The Group sees bullion business as a strategic fit in its overall strategy, and aims to grow its new bullion business into an alternative bullion investment platform.
Dapai International has entered into agreements to place 198.5m new share at S$0.0080 per share to raise S$1.6m. The issue price represents a discount of approximately 6.8% to the last volume weighted average price. The funds raised will be used for the proposed acquisition of a substantial interest in Smart Traffic. Smart Traffic is a system integrator in Thailand providing solutions based on contactless smart card, and provides a wide range of cutting-edge software solutions and integrated hardware components for toll revenue collection systems, parking revenue collection and management systems, pre-paid cash card systems, reward and loyalty management systems, access control systems, and traffic management systems to both private enterprises and government agencies.
Singapore's non-oil domestic exports (NODX) started the year with a 9.9% plunge, extending the 7.2% dive in December 2015. The year-on-year drop in the NODX in January was reflected in a decline in shipments to all the top 10 markets, with the exception of the European Union and Malaysia, figures released by trade promotion agency International Enterprise Singapore show. China, Taiwan and Hong Kong were the top contributors to NODX's fall. Month on month, the NODX posted a seasonally adjusted 0.7% rise, against the 2.6% decrease in December.
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