Brokers' take, Latest Business News - The New Paper

Brokers' take

This article is more than 12 months old

Compiled by Navin Sregantan


AUG 19 CLOSE: $0.22

CGS-CIMB, Aug 16

Net profit for the first half of FY2019 missed our expectations at 23 per cent of our full-year forecast.

In the semicon segment, revenue fell 44 per cent year-on-year (yoy) as the semiconductor industry slowed down due in part to the global trade tensions. The life science segment did better with revenue growth of 83 per cent yoy.

We think net profit growth could resume in FY20 as the semicon industry recovers and new customers/products in the life science segment start to contribute.

One factor that could affect profitability will be the pace of investment (software, machinery, skilled labour) that GVT intends to undertake to grow the company.

Resolution of the US-China trade tension as well as the Japan-Korea spat would be positive.

We downgrade our rating to a "Hold" given the weak first half performance.

Our earnings cuts reflect the impact of trade tensions on the semicon segment of GVT's business. Given its small profit base, earnings have higher sensitivity to revenue volatility.

Potential re-rating catalysts are further order wins and earnings recovery in FY2020. Downside risks are pushback in customer orders and how the US-China trade war plays out.


AUG 19 CLOSE: $10.71

DBS Equity Research, Aug 16

Post OCBC Bank's acquisition of Wing Hang Bank in 2014, OCBC has benefited significantly from enhancing franchise value through the merger across Greater China as it continues to be management's focus as the largest market outside Singapore.

Management has maintained the need for strong capital levels amid volatile markets and for market opportunities (for instance, acquisitions).

While we believe that any market opportunities across OCBC's four key geographies and three core business pillars may bode well for the bank's longer-term regionalisation strategy, we are also cautious on acquisition uncertainties should it materialise.

We are of the view that OCBC's dividend policy, concerns over its non-performing assets coverage ratio (lowest among peers), as well as execution of any near-term market opportunities could continue to weigh on its near-term share price performance.

We maintain our call as we believe there are limited catalysts for the stock currently.

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