ST Engineering (STE SP)
Defensive Growth Story; Keep BUY
Keep BUY, with a higher SGD4.45 TP from SGD4.10, 12% upside with 4% FY20F yield. ST Engineering (STE) offers strong visibility on double-digit profit CAGR over FY19-21, aided by the execution of its record-high SGD14.1bn orderbook, and inorganic growth from the acquisition of MRAS and Newtec. This, along with its strong FCF generation capability and dividend yield, makes the stock a defensive Top Pick. Timely completion of the Newtec acquisition and continuing order wins could be key re-rating catalysts.
CNMC Goldmine Holdings Limited
Ongoing output improvement
SINGAPORE | MINING | 1Q19 RESULTS
1Q19 revenue and PATMI missed our expectation due to seasonality and lower ore grade.
1Q19 production well improved YoY but underperformed QoQ.
Most expansion plans are on track.
We maintain our BUY recommendation with an unchanged TP of S$0.31
|MAYBANK KIM ENG||CGS CIMB|
DBS Group (DBS SP)
Not its first rodeo
China exposure evokes doom & gloom. Is it justified?
North Asia delivers a third of DBS’ income. Intensifying US-China trade tensions have created operating and news-flow risks. Nevertheless, DBS has been delivering North Asian ROAs that are significantly above its long-term mean since the trade war began in 1Q18. Asset quality is also much better than at home. In North Asia, DBS is mostly exposed to highquality corporates and FIs, funded by a large, low-cost CASA base. This puts it in a stronger position to deal with trade-war volatility than regional peers, we believe. Importantly, its Singapore earnings should be more than sufficient to back guided dividend payments. Maintain BUY with multi-stage DDM (10.3% COE, 3% terminal) based TP of SGD29.46
Prefer liquid and large caps
■ We think earnings predictability, value and yield will be key in the months ahead. We also prefer large and liquid stocks to absorb shocks in the market.
■ Key change to our strategy: downgrading the bank sector to Neutral from Overweight due to waning catalysts (risk of rate cuts, slower loan growth).
■ Top picks: CD, STE, KEP, UOL UOB, CCT, MCT, SUN. We remove DBS, CIT, CAPL, CDREIT. Favourite small caps: CSE, FRKN and RSTON.
Check out our compilation of Target Prices