OVERVIEW:
The counter is the longest established local bank, formed in 1932. It operates banking business as OCBC Bank (Malaysia, etc), Bank OCBC NISP (Indonesia, etc) and Bank of Singapore in over 18 countries and territories. It has strategical stakes in financial business, such as Great Eastern (insurance), Lion Global Investor (asset management) and OCBC Securities (brokerage). In greater China region, it has 20% stake in Bank of Ningbo and also fully acquired Wing Hang Bank on 2014.
On 2011 and 2012, the counter was ranked by Bloomberg Markets magazine as the World's Strongest Bank.
HIGHLIGHTS:
(1) Latest financial results saw the group's 1H2015 core net profit up by 12% to $1.6B year on year with net interest income leap by 14%. Operating profit increased 6% year on year. Such performance is in line with its peers.
(2) In constant currency terms, customer loans at 2Q2015 grew 18% to $210B year on year. 41% is contributed from Singapore and 28% from Greater China. Customer deposits also grew 22% to $246B.
(3) Both leverage and capital ratio are well above regulatory requirement by Basel Committee.
(4) Newly acquired Wing Hang Bank contributed HK$1B for 1H2015. In Greater China region, consumer loan grew 110% to $58B, while non-performing loan (NPL) remained low at 0.3%.
INVESTMENT THEMES:
(1) The counter couldn't be isolated from recent market sell down. Current share price represents P/E ~ 8.7 and P/B ~ 1.1 which has fallen into attractive prize zone. An estimated P/E chart can be referred to below chart. Shall current price hits lower price, the more value it presents.
(2) 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. Local banks will be beneficiary of rising rate undoubtedly.
(3) Over past 4 years, dividend issued by the counter has been increasing > 2% annually. Total dividend issued on 2015 is 0.36, so the current dividend yield is ~ 4%.
(4) Assuming 5~6% sliding on loan growth and asset quality, DBS rated the counter at $10. It is based on P/B ratio at 1.1
ENTRY PRICE:
Accumulate now so as to catch the low entry then look forward next rising trend.
No comments:
Post a Comment