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MAYBANK KIM ENG |
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Banks Domestic growth not holding up
■ Industry loan growth stayed lacklustre at +0.2% mom/+4.4% yoy in Jul 2019 as regional loan growth offset the 0.9% mom contraction of domestic credit. ■ Domestic mortgages contracted for a 6th consecutive month, but we think that increased Jul sales volumes could be indicative of better 2H19 growth. ■ Singapore could see five new digital bank licences awarded come mid-2020. Catering to the underserved segment in SG is MAS’s key assessment factor. ■ Maintain Neutral. Key downside risks are more Fed rate cuts, but c.5% yields and attractive valuations are key support pillars for the sector. Prefer UOB.
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Singapore Aviation Services Traffic stats: Ain’t no sunshine
Humdrum YTD traffic numbers, but we upgrade SIE June visitor growth was a mere 0.4% YoY while July air traffic fell 0.9% and cargo volumes shrank 7.2%. July passenger growth of 3.1% was the only bright spot with the effect of Changi’s T4 capacity expansion continuing to play out. Despite the lackluster growth outlook for Singapore for 2019, we remain positive on the sector as the stocks are well diversified geographically and have demonstrated earnings resilience in past downturns. Upgrade SIE to BUY from HOLD.
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PHILLIP SECURITIES |
UOB KAYHIAN |
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Oversea-Chinese Banking Corp Ltd Creation of Franchise Value in Greater China SINGAPORE | BANKING | UPDATE
We attended OCBC’s Greater China Media and Sell-Side Analysts Briefing in Hong Kong and Macau on the 13th and 14th August 2019. The event shared insights and updates on the Group’s growth and transformation journey in Greater China over the last 5 years, as well as plans to continue to grow in the region. Since the Wing Hang acquisition, earnings from Greater China tripled to 18% and AUM from wealth management tripled. Maintain ACCUMULATE at a slightly lower TP of $12.32 (previous TP: $12.50). We increased our credit cost assumptions to 23 bps (previously 20 bps), and lowered our loan growth estimate to 4.0% (previously 4.4%).
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Thai Beverage (THBEV SP) Positive Policies But Uncertain Effects; Maintain HOLD
The recent government stimulus packages are largely positive in supporting farm income though we remain cautious on its full effects in boosting alcohol volume growth. We think that there may be other inhibiting factors such as tepid organic growth in per capita alcohol consumption and other potential government initiatives, such as a minimum wage hike, that would likely be marginally negative. Maintain HOLD with an unchanged SOTP-based target price of $0.87. Entry price: S$0.76.
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