UOB(UOB.SP):DOWNGRADE_TO_N:_WEAK_GROWTH_MOMENTUM-2013-02-28.pdf
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1、 abc Global Research Lower pre-tax earnings were within market expectations. 4Q12 pre-tax earnings fell 16% q-o-q to SGD740mn on slower revenue momentum, a seasonal uptick in costs and higher individual impairment charges. However, the squeeze was much less pronounced at the net profit level due to
2、an atypically low tax rate. As a result, 4Q12 net profit fell by only 2% q-o-q to SGD695mn. 4Q12 pre-tax earnings were within consensus forecasts. UOB declared a final net DPS of SGD0.40 and a special DPS of SGD0.50. This brought full year net DPS to SGD0.70 representing a 41% payout ratio (3.6% yie
3、ld). Top-line trends were weak. Net loans-to-deposits (LDR) fell to 84% (3Q12: 86%) as loans rose 2% q-o-q vs. a 5% increase in deposits. This together with a shorter securities portfolio duration caused NIM to fall 8bps q-o-q to 1.76%. Non-interest income fell 10% q-o-q on lower trading income and
4、now accounts for 39% of total income (3Q12: 42%). Operating costs rose 5% q-o-q on higher seasonal staff costs. As a result, cost-to-income rose to 45% (3Q12: 41%). Asset quality generally remained robust with overall gross NPL falling to 1.52% (3Q12: 1.64%). However, credit cost did rise to 0.4% of
5、 average net loans (3Q12: 0.32%) as UOB set aside more individual impairment reserves for a specific OECD loan account that was already classified as NPL in 3Q12. A neutral outlook. Management expects high single digit loan growth in 2013 driven by its regional businesses. In the absence of rising r
6、ates or a steeper yield curve, NIM is expected to trend down in the near future. On a brighter note, management seems more comfortable with the watered down liquidity coverage ratio under Basel III. EPS forecasts and price target cut. Downgrade to Neutral. We cut our 2013-14E EPS forecasts by 5%-9%
7、to reflect weaker NIM. Our forecasts are now 5%-7% below consensus. We now expect 4% EPS contraction in 2013E as revenue grinds to a halt and credit costs gradually rise on a higher loan base. RoE should fall to 11.1% from c.12% earlier. As a result, we cut our price target to SGD19.65 from SGD24.30
8、 after baking in a lower 11.1% sustainable RoE (previously 12.7%). We downgrade UOB to N from OW. At 1.3x Dec 13E BV, UOB is already trading at 1SD below its average 1.6x PBV multiple. Together with a 3.4% dividend yield, downside should be supported. Neutral Target price (SGD) 19.65 Share price (SG
9、D) 19.22 Forecast dividend yield (%) 3.4 Potential return (%) 9.1 Note: Potential return equals the percentage difference between the current share price and the target price, plus the forecast dividend yield Dec 2011 a 2012 e 2013 e HSBC EPS 1.40 1.60 1.72 HSBC PE 13.7 12.0 11.2 Performance 1M 3M 1
10、2M Absolute (%) 1.9 6.5 6.1 Relative (%) 2.4 -1.7 -2.9 Note: (V) = volatile (please see disclosure appendix) 28 February 2013 Kar Weng Loo* Analyst The Hongkong and Shanghai Banking Corporation Limited, Singapore branch +65 66580621 .sg Todd Dunivant* Head of Banks Research, Asia Pacific The Hongkon
11、g and Shanghai Banking Corporation Limited +852 2996 6599 .hk View HSBC Global Research at: http:/ *Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/qualified pursuant to FINRA regulations Issuer of report: The Hongkong and Shanghai Banking Corporation Limited, Sing
12、apore Branch MICA (P) 038/04/2012 MICA (P) 063/04/2012 MICA (P) 110/01/2013 Disclaimer and 2) from time to time to identify short-term investment opportunities that are derived from fundamental, quantitative, technical or event-driven techniques on a 0-3 month time horizon and which may differ from
13、our long-term investment rating. HSBC has assigned ratings for its long-term investment opportunities as described below. This report addresses only the long-term investment opportunities of the companies referred to in the report. As and when HSBC publishes a short-term trading idea the stocks to w
14、hich these relate are identified on the website at Details of these short-term investment opportunities can be found under the Reports section of this website. HSBC believes an investors decision to buy or sell a stock should depend on individual circumstances such as the investors existing holding
15、s and other considerations. Different securities firms use a variety of ratings terms as well as different rating systems to describe their recommendations. Investors should carefully read the definitions of the ratings used in each research report. In addition, because research reports contain more
16、 complete information concerning the analysts views, investors should carefully read the entire research report and should not infer its contents from the rating. In any case, ratings should not be used or relied on in isolation as investment advice. Rating definitions for long-term investment oppor
17、tunities Stock ratings HSBC assigns ratings to its stocks in this sector on the following basis: For each stock we set a required rate of return calculated from the cost of equity for that stocks domestic or, as appropriate, regional market established by our strategy team. The price target for a st
18、ock represents the value the analyst expects the stock to reach over our performance horizon. The performance horizon is 12 months. For a stock to be classified as Overweight, the potential return, which equals the percentage difference between the current share price and the target price, including
19、 the forecast dividend yield when indicated, must exceed the required return by at least 5 percentage points over the next 12 months (or 10 percentage points for a stock classified as Volatile*). For a stock to be classified as Underweight, the stock must be expected to underperform its required ret
20、urn by at least 5 percentage points over the next 12 months (or 10 percentage points for a stock classified as Volatile*). Stocks between these bands are classified as Neutral. Our ratings are re-calibrated against these bands at the time of any material change (initiation of coverage, change of vol
21、atility status or change in price target). Notwithstanding this, and although ratings are subject to ongoing management review, expected returns will be permitted to move outside the bands as a result of normal share price fluctuations without necessarily triggering a rating change. 10 UOB (UOB SP)
22、Commercial Banks 28 February 2013 abc *A stock will be classified as volatile if its historical volatility has exceeded 40%, if the stock has been listed for less than 12 months (unless it is in an industry or sector where volatility is low) or if the analyst expects significant volatility. However,
23、 stocks which we do not consider volatile may in fact also behave in such a way. Historical volatility is defined as the past months average of the daily 365-day moving average volatilities. In order to avoid misleadingly frequent changes in rating, however, volatility has to move 2.5 percentage poi
24、nts past the 40% benchmark in either direction for a stocks status to change. Rating distribution for long-term investment opportunities As of 27 February 2013, the distribution of all ratings published is as follows: Overweight (Buy) 44% (29% of these provided with Investment Banking Services) Neut
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