UOBKayhian on 12 Feb 2015
FY15F PE (x): 12.1
FY16F PE (x): 10.9
OCBC reported net profit of S$791m for 4Q14, which is below our forecast of S$909m.
Re-positioning OCBC Wing Hang. OCBC will utilise its onshore-offshore strategy to
engage customers onshore in China to service their offshore needs in trade and
investment. It plans to capture flows in trade, capital and wealth due to the increased
connectivity between Greater China and Southeast Asia. The acquisition of OCBC Wing
Hang has also strengthened funding for international currencies, such as US dollar and
the renminbi. US dollar is commonly used for cross-border transactions while the
renminbi. is increasing accepted for trade settlement.
Maintain BUY. We roll over our valuation to 2015. Our target price of S$12.65 is based
on1.59x P/B, derived from Gordon Growth Model (ROE: 11.5%, required return: 7.8%
and growth: 1.5%).
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