Compiled by Navin Sregantan
SINGAPORE BANKS| OVERWEIGHT (MAINTAINED)
UOB Kay Hian, July 1
The Monetary Authority of Singapore will issue up to five new digital bank licences to non-bank players.
This includes up to two digital full bank (DFB) licences to provide financial services and take deposits from retail customers and up to three digital wholesale bank (DWB) licences to serve small and medium-sized enterprises and other non- retail segments.
Applicants for DFB licences must be headquartered in Singapore and controlled by Singaporeans. Foreign companies have to form joint ventures with a Singapore company.
Application for DWB licences is open to all companies.
Singapore banks are digital savvy and can compete effectively against new entrants due to their comprehensive omni-channel approach.
New entrants are subject to similar risk-based capital and liquidity requirements but do not have physical branches, nor access to automatic teller machines and cash deposit machines.
We find requirements for DFB and DWB to be rather restrictive.
Banking sector catalysts include lenders evolving into yield plays and benefiting from single-digit loan growth and stable asset quality.
Meanwhile, risks to the sector rating include slower economic growth in Europe and China and a hard Brexit.
WILMAR INTERNATIONAL| BUY (INITIATE)
JULY 1 CLOSE: $3.74
TARGET PRICE: $4.21
Maybank Kim Eng, June 28
Wilmar International has entrenched market-leading positions in essential food items - cooking oil, flour, rice, sugar and animal feed inputs - in the world's largest and fastest growing emerging markets.
Over 90 per cent of Wilmar's revenues are generated in emerging markets.
In China, India, South-east Asia and Africa, its brands have leading market shares in consumer staples.
This provides a defensible moat to take advantage of rising affluence as well as increasing demand for food quality and safety.
As a non-tech, consumer staples play with a 30-year track record, Wilmar offers shelter against uncertainty from the US-China trade war.
The African swine flu and changing bio-diesel mandates may introduce some volatility but may also open doors for opportunities.
Environmental, social and corporate governance issues, given their sizeable footprint across the value chain, remain the critical known-unknown.
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