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UOB KAYHIAN |
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Banks Limited Impact Expected From Softer GDP
Maintain OVERWEIGHT with BUYs on our Top Picks UOB and DBS. Market expectations of softer 2019 GDP growth for Singapore and cut in US Federal Funds Rate (FFR) in 2H19 could dampen investors’ appetite for Singapore banks. However, with economic recovery likely in 2020, we remain bullish on the sector.
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Health Management International (HMI SP)
Healthy Offer To Accept EQT, a leading European investment firm, and HMI have jointly proposed to privatise HMI by way of a scheme of arrangement at S$0.73/share. The cash offer is a 30% premium to its 6-month VWAP and represents an implied 2020F PE of 29x, above peers’ average of 26x. We recommend shareholders accept the cash offer.
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CGS CIMB |
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SIA Engineering Too fast too furious
■ We think the recent share price surge has already priced in the optimism of a possible take-over by SIA, which we think may not occur in the near term. ■ With SIA’s net gearing likely stretched to 73% by end-FY20F, from 28% now, due to aircraft delivery, we see no imminent need for SIA to take SIE private. ■ Maintain Add with an unchanged TP of S$3.11, still based on DCF valuations. SIE is a yield stock (c.4%) backed by its cash balance.
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Check out our compilation of Target Prices