SINGAPORE (Feb 14): Lim & Tan Securities is recommending that investors take profit on OCBC, following the 15% run-up in its share price after November.
At current levels, Lim & Tan says that the stock is trading at 12 times earnings, and at 1.14 times its book value. Given that it is trading at parity to the group’s revalued net asset value of $10.03, the brokerage prefers to sell the stock now and buy the stock again when it is closed to its book value of $8.49 per share.
For 4QFY16, OCBC’s earnings fell 18% to $789 million, which the brokerage said was 9% lower than analysts’ estimates. The disappointing results were fuelled by the 57% surge in provisions for bad debts to $305 million.