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Brokers’ take

This article is more than 12 months old

Compiled by Navin Sregantan



JULY 15 CLOSE: $3.83


DBS Equity Research, July 15

Wilmar International's subsidiary Yihai Kerry Arawana Holdings' (YKA) application to list on the Shenzhen Stock Exchange has been accepted by the China Securities Regulatory Commission (CSRC) and is awaiting approval by the regulator.

Subject to CSRC's approval of Wilmar's listing application, the plan is to list around 10 per cent of YKA shares on the exchange with no secondary offering.

YKA is one of China's largest agribusiness and food processing companies, contributing about 60 per cent of Wilmar's core net profit in FY2018.

During Wilmar's first quarter analyst briefing, management stated it intends to list YKA in the fourth quarter. We believe Wilmar is on track for this pending regulatory approval of its application.

Proceeds from the public listing will be used to fund YKA's capital expenditure, which we expect to be largely in China. According to Wilmar, the proposed listing will increase its market visibility and awareness in China, and boost growth in its China operations.

The proposed listing of its China operations held under YKA should provide upside risk to our target price as we have not factored in the listing in our current valuation methodology.



JULY 15 CLOSE: $25.90


RHB Research Institute, July 12

At end-April, DBS management guided for 2019 loan growth in the mid-single digits. We believe business loans expansion could have offset the weak housing mortgage trend.

Consequently, we expect DBS to record around 1 per cent quarter-on-quarter loan expansion for Q2 earning results.

In Q2, the three-month Sibor averaged 1.98 per cent, higher than Q1's 1.92 per cent. This is a positive for DBS' net interest margin (NIM). There is also the lagged effect of a rising Sibor on the bank's NIM.

Overall, we believe DBS' Q2 NIM could have widened marginally from Q1's 1.88 per cent.

Indications point to continued good asset quality, as there is no distress in any particular sector.

We believe Q2's non-performing loan (NPL) ratio should be flattish quarter-on-quarter.

While we lower FY2020 and 2021 NIM assumptions after recent Fed dovishness, this negative is offset by stronger non-interest income, particularly from the wealth management segment, as trading could pick up with stimulation from the interest rate cuts.

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