DBS Group Holdings is an investment holding, treasury and funding vehicle for itself and its subsidiaries. Co.'s main subsidiary is DBS Bank Ltd, which is engaged in a range of commercial banking and financial services, principally in Asia. Co.'s various business segments are: Consumer Banking/ Wealth Management, which provides individual customers with a range of banking and related financial services; Institutional Banking, which provides financial services and products to institutional clients; as well as Treasury, which provides treasury services to corporations, institutional and private investors, financial institutions and other market participants.
This earnings season mostly saw in-line results with 65% of companies meeting expectations which is the highest in the past five years. In addition, we note that only 8% of the companies beat expectations in 2Q19 which is the lowest percentage of beats in the past three years. Post the results we have reduced our market EPS growth further and have cut our 2019 year-end target for the FSSTI by 7% to 3,210.
Dairy names reported in-line 1H19 results with sales on track with guidance while bottom lines were slightly ahead due to the positive impact from non-operating factors. Leaders continued to win market share via product innovation, brand investment and channel penetration. The recent raw milk upcycle, representing higher cost inflation, while we note other materials have gone down as well as mix-upgrade to more than offset higher price of milk. Maintain OVERWEIGHT on the sector.
CX’s fixed cash cover is likely to be below 1.0x in 2H19 and the carrier also has HK$16b in debt that is due by the year end, along with an estimated HK$7b in capex for the same period. Thus, CX will be facing a severe cash crunch unless it manages to raise further capital in the form of MTN or a rights issue. Fuel volatility will also not be in CX’s favour as the carrier has only hedged 30% of Brent fuel requirements for 2019. Maintain SELL. Target price: HK$9.10.
GREATER CHINA Sector Macau Gaming: 1H19 sector review and 2H19 outlook. Property: Limited impact from renminbi fluctuation. Results Sun Hun Kai Properties (16 HK/BUY/HK$116.90/Target: HK$148.00): FY19: Results in line; strong balance sheet and positioning allow company to capitalise on opportunities. INDONESIA Update Astra Agro Lestari (AALI IJ/BUY/Rp10,325/Target: Rp11,700): Expect 61.8% yoy net profit growth in 2020; upgrade to BUY. MALAYSIA Sector Telecommunications: 1H19 earnings affected by 4% yoy decline in service revenue. Telcos to continue focusing on customer acquisition and good...
MINT’s strategy to grow its high-tech buildings segment is transformational. It has expanded exposure to high-tech buildings to 43.3% of portfolio valuation, much larger than flatted factories’ at 33.1%. We view acquisitions to further increase exposure to data centres as a positive catalyst. MINT provides growth from data centres at a reasonable price. Its FY20F distribution yield of 5.5% is higher than 5.2% for AREIT and 4.5% for Keppel DC REIT. Upgrade to BUY. Target price: S$2.58.
KEY HIGHLIGHTS Update Mapletree Industrial Trust (MINT SP/BUY/S$2.30/Target: S$2.58): High-tech transformation powered by data centres; Upgrade to BUY. TRADERS’ CORNER Jardine Cycle & Carriage (JCNC SP): Trading BUY Singapore Airlines (SIA SP): Trading BUY
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