OVERVIEW:
The household branding counter is a leading financial group in Asia with over 280 branches across 18 markets. Headquartered in Singapore, it has growing presence in Greater China, Southeast Asia, and South Asia. Singapore government investment company, Temasek holding is the major shareholder with 30% of shares holding.
HIGHLIGHTS:
(1) Latest financial results saw net interest income up by 13% to $3.43B for 1H2015. Loan grew by 9% to $280B. This was contributed by re-pricing of loans at higher interest rates.
(2) Non-interest income rose 16% to $2B. Wealth management fee grew 34% to $342M with total assets under management increased 22% to $143B. Institutional banking income grew 7% to $2.67B. A healthy pipeline of investment banking deals lined up for 2H2015.
(3) Generally, the results beat expectation among research houses. Based on liquidity requirements effective 1 Jan, 2015 under the Basel framework, the counter's average liquidity coverage ratio during 2Q was 131% which was well above regulatory minimum of 100%. Both capital adequacy ratio and leverage ratio are more than fulfilling required ratio as well.
INVESTMENT THEMES:
(1) Even though registering with strong financial result, the counter has been shedding in share price (-13%). Global market sell down has been intensifying with the worries of China economy melting as well as uncertainty over interest rate decision from US Federal Reserve on coming Sep. However, value persists throughout such panic mood. Valued investor get a chance to gain holding from such strong counter only during such turbulent environment.
(2) Current price represents P/E ~ 10.8 and P/B ~ 1.1. An estimated P/E chart can be referred to below chart. Shall current price hits lower price, the more value it presents.
(3) Shall US Federal Reserve announce rate hike either end of 2015 or beginning of 2016, SIBOR (Singapore Interbank Offered Rates) is expected to follow suit as well. Banks will be beneficiary of rising rate undoubtedly.
ENTRY PRICE:
Accumulate with unit of 200~300 shares each time, so as to catch the low entry then look forward next rising trend.
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