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Investors’ Corner (Venture, GP Hotels, UOB, DBS )
Investors' Corner | 28 September 2012
Related stocks:
V03
U11
D05
By: Simeon Ang
Articles (125) Profile

Venture Corp
Price – $7.93
Target – $9.65

We forecast Venture’s revenue to grow only 1% this year due to tough economic conditions. However, that being said, we also feel that 2013 will be pick-up year for Venture as it is actively prepping itself for the anticipated global recovery then. Venture appears to be doing this through a focus on high-quality customers with aims of achieving double-digit percentage growth with industry-leading margins in the next 3 years. The penetration of promising accounts such as Oclaro, Retail Store Solutions and Verifone – the latter being the acquirer of Venture’s existing customer, Hypercom – bodes well for its focus of choosing only the best customers. Until the focus reaps concrete figures, we look to Venture’s annual dividend per share of $0.55 which currently provides an almost 7% yield. In view of the above and the support provided by the counter’s yield, we continue to recommend BUY. – Maybank Kim Eng (24 Sep)

Global Premium Hotels
Price – $0.25
Target – $0.29

Economy and mid-tier hotel operator Global Premium Hotels (GPH) is expected to be a key beneficiary from the increase in tourism arrivals. The second largest operator of economy-tier hotels in Singapore, GPH has grown its portfolio of rooms by a compound annual growth rate (CAGR) of 10.9% p.a. from 2006 to 2011. This is significantly stronger than the hotel industry’s CAGR of 6.6% over the same period. This growth is expected to be put to good use as the Singapore Tourism Board projects tourism arrivals to increase at a CAGR of 6.6% p.a. until 2015. GPH’s portfolio is expected to grow further by about 15% with the development of an approximately 260-room Parc Sovereign (GPH’s mid-tier hotel brand) hotel at Tyrwhitt Road. Based on third party valuers’ and management’s estimates, the development could potentially result in a $42m accretion. We initiate our coverage of GPH with a BUY recommendation. – OCBC Investment (24 Sep)

United Overseas Bank
Price – $19.61
Target – $19.50

Target – $19.50
UOB is expected to face continued pressures from its net interest margins (NIM) due to growth in Singapore and Hong Kong (low NIM markets) as prices in higher NIM markets such as Malaysia, Thailand and Indonesia stabilise. However, the pressures might be offset by UOB’s growing global transaction services (GTS) business across the region. UOB’s asset/equity ratio is currently 10.9x, the lowest amongst the 3 local banks. As of writing, UOB has delivered 33% total return year-to-date. We feel the share price appreciation was driven largely by across the board strength in UOB’s financial figures. However, we anticipate UOB’s ROE to decline 20 bps year-on-year in 2013. This will thus cap any gains in the stock. As such, we recommend investors to book profits on the investment and shift from UOB and OCBC to DBS. We maintain NEUTRAL. – JP Morgan (21 Sep)

DBS Group Holdings
Price – $14.61
Target – $18.50

We note DBS has already completed its phase I of turnaround and delivered roughly 100 basis points (bps) of through-the-cycle return on equity (ROE) increase in the last 10 quarters. DBS achieved this through higher non-interest income (treasury cross-selling), lower credit costs (better credit underwriting) and higher leverage (Asset/Equity of 12x). We also note that DBS’s revenue/assets declined only 20 bps as compared to 30 bps in the industry. We attribute this resilience to 1) revamp of DBS’s asset-liability management (shift from negative to positive duration), and 2) treasury (focus on customer flows). These structural changes have led to lower volatility and higher revenues. We expect DBS to achieve the highest balance sheet and net profit growth in industry in the next 2 to 3 years. We feel the commencement of DBS’s phase II of its turnaround plan will lead to a roughly 100 bps accretion to ROE figures by 2014 to 13%. DBS remains our top pick of the industry and we reiterate our OVERWEIGHT rating. – JP Morgan (21 Sep)

Simeon, an LSE graduate, is currently the editor of Aspire. He specialises on topics surrounding trading psychology, politics and macroeconomics.

Please click here for more information about this author.

Venture Corp  15.760 -- --   
Business: Co provides technology services, products and solutions. [FY18 Turnover] Advance Manufacturing & Design Solutions (AMDS) [74.6%], technology products & design solutions (TPS) [25.4%].

Insight: Apr-19, 1Q19 revenue rose 8.5% to $928.8m due to b... Read More
United Overseas Bank  25.760 +0.06 +0.23%   
Business: [FY18 Turnover] Group retail (43.3%), group wholesale (43.2%), global markets & investment management (5.1%), others (8.4%).

Insight: May-19, 1Q19 total income rose 7.8% to $2.4b due t... Read More
DBS Group Hldgs  25.150 +0.15 +0.60%   
Business: [FY18 Total Income] Institutional banking (43.7%), consumer banking/wealth management (42.9%), treasury markets and others (13.4%).

Insight: Apr-19, 1Q19 net profit rose 9% to a record $1.7b.... Read More


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