Daiwa tipped DBS as “our top and only pick” in the Singapore bank sector after the first-quarter results season.
DBS is expected to be the sector leader in earnings per share (EPS) and pre-provision operating profit (PPOP) growth over 2018-20, on better net interest margin gains compared with its peers, Daiwa said in a note this week.
Daiwa forecast DBS to reach a three-year EPS compound annual growth rate (CAGR) of 22 percent, compared with 12 percent for UOB and OCBC.
“We believe DBS’s superior EPS-growth outlook is probably still underappreciated,” Daiwa said.
It also pointed to DBS’s “dividend clarity,” with a relatively high core dividend yield and a more reliable outlook for future dividends.
It kept a Outperform call on DBS, with a S$32.00 target price. It rates both UOB and OCBC at Hold, with target prices of S$28.40 and S$13.40 respectively.
DBS ended Thursday down 0.24 percent at S$28.85, while UOB added 0.17 percent to S$29.54 and OCBC rose 0.08 percent to S$13.20.
