UOB is RHB's top pick when it comes to local banks

UOB is RHB's top pick when it comes to local banks

PC Lee
22/02/19, 05:35 pm

SINGAPORE (Feb 22): United Overseas Bank is the top pick for Singapore banks, says RHB Research which believes the share price weakness after the results release offers a good entry point.

UOB has also declared a final dividend of 50 cents per share and special dividend of 20 cents per share. FY2018 total dividend of $1.20 gives an attractive yield of 4.6%.

Rising 18% y-o-y, UOB’s FY2018 earnings of $4.01 billion came in line with RHB’s forecast of $4.16 billion and consensus’ forecast of $4.05 billion.

For FY2019, management has guided for net interest margin (NIM) to be flattish y-o-y, with an upward bias.

As loans are repriced with a lag of about three months, UOB says home mortgage upwards repricing should help raise asset yields.

“We forecast 2019 NIM of 1.84%, vs 2018’s 1.82%,” says analyst Leng Seng Choon in a Friday report.

Management has also guided for mid single-digit FY2019 loan growth.

4Q18 loans expanded 11% y-o-y and 3% q-o-q, driving up NII (net interest income) but drawdown was muted after the property cooling measures of July 2018.

Management guided for fees to expand by mid single-digits in 2019.

Cost income ratio (CIR) is expected to remain at 44% in the near term.

“While we believe CIR will improve across all banks over the longer term, as digitisation efforts lower costs, management guided for 44% in the near term,” says Leng.

“Maintain ‘buy’ with unchanged target price of $29.80 – pegged to 2019F P/BV of 1.35x,” says Leng.

“Our long-term ROE assumption is 12.9%. This is higher than UOB’s 2018 ROE of 11.3%, and management guidance for 2019 ROE of 12%.”

Shares in UOB closed 40 cents lower at $25.58 on Friday.

UOB and KrisFlyer launch credit card for pairing with savings account to earn air miles from spending

SINGAPORE (Apr 23): United Overseas Bank (UOB) and KrisFlyer have launched the KrisFlyer UOB Credit Card. This is a credit card which can be combined with a savings account to earn bonus KrisFlyer miles when customers spend and save. With the KrisFlyer UOB Credit Card, cardmembers will earn three KrisFlyer miles on their everyday spending, such as on dining and online food delivery, online shopping and public transport. KrisFlyer is Singapore Airlines Group’s frequent flyer programme. According to UOB and KrisFlyer, these everyday spend categories were chosen as they were the fas....

ComfortDelGro deepens footprint in Australia with A$28.3 mil bus acquisition

SINGAPORE (Apr 23): ComfortDelGro Corporation announced Tuesday it is acquiring Australian bus service operator B&E Blanch for A$28.3 million ($27.5 million). B&E Blanch, which has a fleet of 48 buses and coaches, runs scheduled route and school bus services in New South Wales (NSW). The company operates as Blanch’s Bus Company and Brunswick Valley Coaches. The latest acquisition is ComfortDelGro’s sixth acquisition in Australia in the last 12 months, and its fifth in NSW. ComfortDelGro says the purchase consideration, which is approximately 7.6 times EBITDA, will be ....

UIC posts 35% higher 1Q earnings of $81 mil on higher contribution from associated companies

SINGAPORE (Apr 23): United Industrial Corporation (UIC) declared earnings of $81.1 million for 1Q19, 35% higher than $60.2 million in 1Q18. This came on the back of a 12% increase in revenue to $185.3 million from $165.7 million a year ago, mainly due to higher sales of trading properties with higher sales achieved for the group’s residential development projects; higher contribution from investment properties; and higher contribution from information technology operations. The group’s hotel operations remained stable. As cost of sales also increased by 17% y-o-y to $105.5 million, g....