August 05, 2021

Market talk for the week (2 Aug)

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What happened in markets this week, and what are analysts talking about?

UOB

DBS; Maintain BUY TP S$29.20 Net Profit beat consensus by ~4% due to lower than expected provisions and higher than expected non interest income. The Bank resumed dividend policy of 50% payout ratio. 

UOBKH; Not ratedNet interest income turned around since 2H20. The House sees the bank improving cost efficiency and asset quality being stabilised. Management has lowered its guidance for credit costs from below 30bp to below 25bp for 2021 due to its resilient portfolio.

Keppel Corp to accquire SPH

UOBKH: The House view Keppel Corp’s proposal positively as it allows the Group to enter new property segments and expand its asset management to generate more recurring income. The House recommends SPH investors to accept offer, as although offer could be higher but not by much. A full privatisation offer also avoids scenario where prime assets are cherry picked.

KGI; Maintain Outperform on Keppel Corp with lower TP of S$6.22. The House sees the acquisition of SPH by Keppel a good move to swap out underperforming assets, but remains netural on the acquisition. The key advantage they see is higher AUM from acquisition and hence higher recurring income. Keppel expects Keppel Capital’s AUM to increase 27% to S$47b with the transaction. SPH’s key assets include UK student accomodations, stake in SPH REIT and other development assets (eg. Woodleigh Residences)

Rex

KGI: Initiate Outperform with TP S$0.32 Rex owns and operates an oil producing field in Oman and has a portfolio of exploration licences in Norway. The House forecast Rex’s net cash position to surge to US$107m by  FY2022F based on US$65 oil price. 

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