DBS 01 (May 08 - Jul 10)

[financecaptain]

Hi financecaptain

I take umbrage with this post. It's hogwash. I don't see why this whole blog entry is re-copied here.

What do you mean ? Calling it a "hogwash" too ? Offence over what ?

There is no storm here. I take umbrage with the post and not the 'poster'. I juz wonder why a 'URLlink' was not given. A link will facilitate easy reading as one can pick up all the responses to that blog entry. Responses to the hogwash is given in that blog.

Of course there was a URLink to the blog.

[LenaHuat]

Hi financecaptain

I'm sorry abt having overlooked the link. I dived straightaway into the msg and opened up a new window to google asiabanker without realizing that there was a link at the top. This is what happens let slipped when I get to the bottom of the long post.

Hi Winston

Thanks a million for your reminder.

[winston]

Not vested..From Kim Eng:-

DBS Group Holdings – Company update (Pauline Lee 64321453) Previous day closing price: $9.22
Recommendation: BUY (upgrade from Hold)
Target price: $11 (increased from $10.10)

Bad news priced-in
DBS has been trading at a PBV of 0.6-0.9x YTD - a steep discount to its peers that have been trading at above book values. The group’s earnings are relatively more vulnerable in this downturn due to its high-risk exposure to SMEs in Hong Kong, depressing NIMs and its huge trading book comprising $5.8bn in debt and equities. However, we view that the stock’s prolonged discount to peers would have reflected the potential earnings disappointment over the next few quarters.

Extreme pessimism could be a blessing in disguise
In fact, the market consensus has already factored in an average 30% yoy decline in FY09 core earnings. Such bearish earnings expectations for FY09 have taken into account high provision charges of $1.2bn on average (a significant 61% surge from FY08), flat loans growth, a more than 10bps-decline in NIM and a 12% yoy dip in fee income. Lower market expectations will minimise earnings downside risks going forward.

Superior capital strength to drive positive catalysts
The group’s recent $4bn rights issue will boost its CAR from 14% to a pro-forma 16.2% with tier-1 at 12.2% (way above regulatory requirements). As a result, we estimate its excess capital will double to $5.8bn or $2.50 per share. Post-rights, the group has emerged as the Singapore bank with the strongest capital strength that is essential to ride through the downturn and tap on growth opportunities.

Early signs of recovery
The spike in Prime-Hibor spreads in 1Q09 bodes well for the group’s NIM in Hong Kong. The Prime-Hibor spread bounces off its lows in 4Q08 and has widened by 152 bps. This could signal the beginning of a recovery for its Hong Kong business that plunged 90% yoy in 4Q08 when the Prime-Hibor spreads narrowed along with rising provisions and operating costs.

Upgrade to reflect new found confidence
The sharp 11.5% contraction in 1Q09 GDP - the steepest decline since 1976, suggests that the economy is bottoming out. Likewise, we reckon the valuations of the Singapore banks are near their trough valuations. In view of the improved economic outlook, we have turned most positive on DBS in view of its superior capital strength and attractive valuations. Upgrade to BUY at a higher target price of $11 (pegged to 1.1x PBV).

[kazataza]

i observed that for 2 days, at the end of the trading day, there will be 1 huge single purchase at a price much higher than the prices throughout the day...this oso seems true for STE....any thoughts?

[iam802]

For STI counters, it happen quite frequent.

You can monitor the price till market 'close'. But, there will still be a trade that is a few bids higher/lower than the 'last trade you see'.

[winston]

DBS GROUP HOLDINGS LTD - UBS reiterated its "buy" recommendation on Singapore's DBS and increased the target price to S$11.30 from S$10.30, citing reasons such as the banking group's ability to gain market share with increased funds gained from a recent S$4 billion ($2.69 billion) rights issue.

[winston]

Goldman upgrades Singapore's DBS to "conviction buy"

SINGAPORE, May 7 (Reuters) - Goldman Sachs on Thursday upgraded DBS Group to "conviction buy" from "neutral" following better-than-expected earnings from Singapore rivals United Overseas Bank (UOB) and Oversea-Chinese Banking Corp .

It also raised its price target for DBS, Southeast Asia's biggest lender, to S$14.20 from S$9.45.

The U.S. bank reiterated its "buy" call on OCBC with an increased target price of S$8.00 from S$6.20 previously, and repeated its "neutral" recommendation on UOB but raised the target to S$16.40 from S$13.00.

Goldman said DBS' more undemanding valuations and high dividend made it the top pick among Singapore banks.

UOB and OCBC reported first quarter earnings on Wednesday [ID:nSP406217]. DBS will report first quarter earnings on Friday.

[winston]

Share Price continues to go up while earnings continues to drop. So is this a good investment ?

UPDATE 1-DBS Q1 profit drops less-than-feared, bad debt may rise

* Q1 bad debt charges almost triple
* DBS says outlook uncertain as bad debt may rise
* DBS shares have rallied 26 percent this week so far (adds detail on earnings, quotes)

By Saeed Azhar SINGAPORE, May 8 (Reuters) - DBS Group , Southeast Asia's biggest bank, posted a smaller-than-expected 28 percent drop in quarterly profit, as trading gains partially offset a jump in soured loans, but it warned bad debts may rise.

Singapore's banks are facing a growing risk of rising bad debts as Asian economies weaken, but at the same time are trying to seize market share for loans and bonds from foreign banks, forced to scale back due to the global financial crisis.

DBS saw loan growth of 14 percent in the first quarter from a year earlier, the fastest among the three listed Singapore banks.

"What drove the good results was that net income and margins were fairly robust, with prospects for loan volume pickup and wider lending spreads in 2009," said Citigroup's Robert Kong after the result.

Jan-March net profit fell to S$433 million ($294 million) from S$603 million a year ago, the bank said on Friday. Analysts had forecast a net profit of S$321 million, according to the average of five forecasts compiled by Reuters.

DBS wrote down S$414 million for bad debts, a rise from S$140 million a year earlier, led by higher charges for loans to small-and-medium businesses turning sour in Hong Kong, and for corporate loans. DBS generates about 90 percent of its earnings from Singapore and Hong Kong.

"Operating outlook remains uncertain, with non-performing loans expected to increase in line with economic weakness," DBS said in a statement.

DBS's smaller rivals, United Overseas Bank and Oversea-Chinese Banking Corp , had reported a 23 percent and 12 percent drop in quarterly profit, respectively, on Wednesday, which were also not as bad as feared.

DBS said quarterly net interest income rose 2 percent to almost S$1.1 billion but trading gains helped boost non-interest income by 76 percent to S$269 million despite a 10 percent drop in fee and commission income as capital markets faltered.

DBS shares have risen around 43 percent since the start of the year, fired up by a recent rally in banking shares around the world. Shares of smaller rivals UOB are up 17 perecent and OCBC has gained 41 percent, while the benchmark Straits Times Index <.FTSTI> is up 27 percent.

[winston]

DBS says downturn bottoming in Singapore, HK

SINGAPORE, May 8 (Reuters) - DBS Group (DBSM.SI) said on Friday it was reasonably confident about its outlook since the economic downturn was bottoming in its main markets of Singapore and Hong Kong, but it would continue to see bad loans.

( Hmm.. how do u define bottoming out ? Would Bad Loans triple when things are bottoming out ? )


"The deterioration has stopped getting worse...I feel we are at a bottom," said Chairman Koh Boon Hwee at a post results briefing, when asked about the economic outlook for Singapore and Hong Kong.

Earlier on Friday DBS, Southeast Asia's biggest bank, posted a smaller-than-expected 28 percent drop in quarterly profit, as strong loan growth and trading gains partially offset a near tripling in bad debt charges.

[winston]

Dont understand this one. They are selling at a 40% discount ? They must know something or they are very desperate. This is SE Asia biggest bank so cant be that desperate. But to sell at 40% discount ??

DBS says divests 2.7 pct stake in India's HDFC

SINGAPORE, May 11 (Reuters) - Singapore's DBS Group said it sold its 2.7 percent stake in India's Housing Development Finance Corp on Friday, which according to a banking source raised about $260 million for the bank.

"We have divested our 2.7 percent stake in HDFC, a portfolio investment, as we believe this is an opportune time to divest the shares," a DBS spokeswoman said on Monday. "We divested the shares on Friday." A source briefed on the deal told Reuters DBS sold 11.62 million shares at 1,110.10 Indian rupees a share in the open market, raising 12.9 billion Indian rupees ($262 million).

Deutsche Bank advised the share sale, the source said.

The stake sale was at a nearly 40 percent discount to HDFC's closing share price on May 7. HDFC shares closed at 1,739.90 rupees on May 8.