Phillip Securities Research Morning Call 26th May 2020 Stock Counter Updates Macro/Sector Outlook . IREIT Global . Singapore REITs Sector . EC world REIT . Singapore Banking Monthly . Propnex Ltd . Singapore Weekly . ComfortDelGro Ltd . ThaiBev PLC Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2019. All Rights Reserved. For internal circulation only. Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. 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Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. 2 SG Banking Monthly Building reserves as outlook dims Tay Wee Kuang Research Analyst Phillip Securities Research Pte Ltd 26th May 2020 Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2019. All Rights Reserved. For internal circulation only. Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. Singapore Banking Monthly – Neutral (Downgrade) 1Q20 banking results snippet DBS OCBC UOB S$mn 1Q20 (YoY) 1Q19 1Q20 (YoY) 1Q19 1Q20 (YoY) 1Q19 4,026 2,490 2,407 Total Income 3,551 2,676 2,406 (+13%) (-7%) (-) 2,470 1,355 1,321 PPOP 2,053 1,556 1,333 (+20%) (-13%) (-1%) 1,086 657 286 Allowances 76 249 93 (+ >100%) (+ >100%) (+ >100%) 1,165 698 855 Earnings 1,651 1,231 1,052 (-29%) (-43%) (-19%) Banking operations largely unaffected in the quarter . UOB comparable, while DBS saw robust growth across all segments . OCBC largely affected by contribution from GEH Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2019. All Rights Reserved. For internal circulation only. Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. Singapore Banking Monthly – Neutral (Downgrade) 1Q20 banking results snippet DBS OCBC UOB S$mn 1Q20 (YoY) 1Q19 1Q20 (YoY) 1Q19 1Q20 (YoY) 1Q19 3,232 2,314 2,362 Regulatory Cumulative GP 2,947 1,708 2,054 (+10%) (+35%) (+15%) Requirement CET-1 CAR 13.9% 14.3% 14.1% 9% Tier 1 CAR 15.1% 14.9% 15.1% 10.5% Total CAR 16.8% 16.4% 17.2% 12% NPL Ratio 1.6% 1.5% 1.6% - NPA Coverage 92% 90% 88% - Unsecured NPA 173% 234% 206% - Coverage LCR 133% 151% 139% 100% Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2019. All Rights Reserved. For internal circulation only. Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. Singapore Banking Monthly – Neutral (Downgrade) NIM DBS OCBC UOB (%) Current 1.86 1.76 1.71 2015 1.77 1.67 1.77 2014 1.68 1.68 1.71 2013 1.62 1.64 1.72 2012 1.70 1.77 1.87 2011 1.77 1.84 1.92 Lending rates under pressure . Current 3M-SIBOR/SOR stands at 0.69% and 0.26% respectively, back to FY13-FY14 levels . Further compression of 10 bps from current levels for FY20 . Impact will equate to 5 to 6% impact on NII, which makes up roughly 65% of total income Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2019. All Rights Reserved. For internal circulation only. Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. Singapore Banking Monthly – Neutral (Downgrade) Loans growth taper in March to 2.41% YoY . Consumer loans fall 2.43% YoY, in particular housing and credit card seeing steeper declines . Business loans increase 5.52% YoY, expected to hold up . FY20 loans growth to remain at 2 – 3%, and increased credit spread may provide buffer to NIM Loans growth (YoY %) March 2020 2.41 February 2020 3.05 January 2020 2.97 December 2019 3.08 November 2019 3.10 Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2019. All Rights Reserved. For internal circulation only. Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. Singapore Banking Monthly – Neutral (Downgrade) SDAV DDAV YoY (+/-) YoY (+/-) ($mn) (mn) May (MTD) 1,326 +20% - - April 1,411 +35% 0.83 -19% March 2,193 +114% 1.53 +34% February 1,377 +30% 1.24 +11% January 1,219 +24% 1.07 +23% SGX business momentum slowing . Fatigue in derivatives volumes; 35% below average of 1Q20 (1.2mn contracts per day) . SDAV fall off peak but remains at heightened level, with institutional clients net selling and retail clients net buying Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2019. All Rights Reserved. For internal circulation only. Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. Singapore Banking Monthly – Neutral (Downgrade) 1Q20 banking results snippet DBS Group Holdings Oversea-Chinese Banking Corp United Overseas Bank Limited ACCUMULATE (Maintained) ACCUMULATE (Maintained) ACCUMULATE (Maintained) BLOOMBERG CODE DBS SP BLOOMBERG CODE OCBC SP BLOOMBERG CODE UOB SP LAST TRADED PRICE SGD 19.18 LAST TRADED PRICE SGD 8.49 LAST TRADED PRICE SGD 19.46 FORECAST DIV SGD 1.32 FORECAST DIV SGD 0.56 FORECAST DIV SGD 1.10 TARGET PRICE SGD 20.60 TARGET PRICE SGD 9.14 TARGET PRICE SGD 20.70 DIVIDEND YIELD 6.88% DIVIDEND YIELD 6.60% DIVIDEND YIELD 5.65% TOTAL RETURN 14.29% TOTAL RETURN 14.25% TOTAL RETURN 12.02% Reduce Singapore banking sector to Neutral . Earnings impact for FY20 expected to come in at around 20-30% . Revised TP by adjusting NIM compression and increased credit costs . Preference for DBS with stronger business momentum and commitment to stable dividend pegged to operational performance than targeted payout ratio or CET-1 ratio Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2019. All Rights Reserved. For internal circulation only. Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. IREIT Global Visibility amidst uncertainty Tan Jie Hui Research Analyst Phillip Securities Research Pte Ltd 26th May 2020 Phillip Securities Research Pte Ltd (A member of PhillipCapital) Co. Reg. No. 197501035Z © PhillipCapital 2019. All Rights Reserved. For internal circulation only. Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. Phillip Securities accepts no liability whatsoever with respect to the use of this document or its contents. IREIT GLOBAL BUY (Upgraded), TP: $0.77, Last: $0.67 + The Positives . Stable results expected for 1H20; 1Q20 was .